76734 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

BUREAU OF CONSUMER FINANCIAL consumers against debt collection intend to codify existing case law or PROTECTION abuses.2 The statute was a response to judicial interpretations of the statute. ‘‘abundant evidence of the use of The final rule has four subparts. 12 CFR Part 1006 abusive, deceptive, and unfair debt Subpart A contains generally applicable [Docket No. CFPB–2019–0022] collection practices by many debt provisions, such as definitions that collectors.’’ 3 According to Congress, apply throughout the regulation. RIN 3170–AA41 these practices ‘‘contribute to the Subpart B contains rules for FDCPA number of personal bankruptcies, to debt collectors. Subpart C is reserved for Debt Collection Practices (Regulation marital instability, to the loss of jobs, any future debt collection rulemakings. F) and to invasions of individual Subpart D contains certain AGENCY: Bureau of Consumer Financial privacy.’’ 4 miscellaneous provisions. The FDCPA established specific Protection. B. Scope of the Final Rule ACTION: Final rule; official consumer protections, enabling interpretation. consumers to establish controls on Communications Provisions when and how debt collectors contact Debt collection efforts often begin SUMMARY: The Bureau of Consumer them, establishing privacy protections with attempts by a debt collector to Financial Protection (Bureau) is issuing surrounding the collection of debts, and reach a consumer. Communicating with this final rule to revise Regulation F, protecting consumers from certain a debt collector may benefit a consumer which implements the Fair Debt collection practices. The FDCPA also by helping the consumer either to Collection Practices Act (FDCPA) and established broad consumer protections, resolve a debt the consumer owes or to currently contains the procedures for prohibiting harassment or abuse, false or identify and inform the debt collector if State application for exemption from the misleading representations, and unfair the debt is one that the consumer does provisions of the FDCPA. The Bureau is practices. As the first Federal agency not owe. However, debt collection finalizing Federal rules governing the with authority under the FDCPA to communications also may constitute activities of debt collectors, as that term prescribe substantive rules with respect unfair practices, may contain false or is defined in the FDCPA. The Bureau’s to the collection of debts by debt misleading representations, or may be final rule addresses, among other things, collectors, the Bureau is adopting this harassing or abusive either because of communications in connection with final rule to implement and interpret their content (for example, when debt debt collection and prohibitions on those consumer protections, including collectors employ profanity) or because harassment or abuse, false or misleading by clarifying how they apply to newer of the manner in which they are made representations, and unfair practices in communication technologies. The (for example, when debt collectors place debt collection. Bureau intends to issue a disclosure- telephone calls with the intent to harass DATES: This rule is effective November focused final rule in December 2020 or abuse). 30, 2021. (disclosure-focused final rule) to To address such concerns about debt FOR FURTHER INFORMATION CONTACT: implement and interpret the FDCPA’s collection communications and to Dania Ayoubi, Joseph Baressi, Seth requirements regarding consumer clarify the application of the FDCPA to Caffrey, Brandy Hood, David Jacobs, disclosures and certain related newer communication technologies that Courtney Jean, Jaclyn Maier, Adam consumer protections. have developed since the FDCPA’s Mayle, Kristin McPartland, Michael A. Coverage and Organization of the passage in 1977, the final rule, in Scherzer, or Michael Silver, Senior Final Rule general: Counsels, Office of Regulations, at 202– • Clarifies restrictions on the times The final rule is based primarily on 435–7700. If you require this document and places at which a debt collector the Bureau’s authority to issue rules to in an alternative electronic format, may communicate with a consumer, implement the FDCPA and, please contact CFPB_Accessibility@ including by clarifying that a consumer consequently, covers debt collectors, as cfpb.gov. need not use specific words to assert that term is defined in the FDCPA.5 The that a time or place is inconvenient for SUPPLEMENTARY INFORMATION: final rule restates nearly all of the debt collection communications. FDCPA’s substantive provisions largely I. Summary of the Final Rule • Clarifies that a consumer may in the order that they appear in the restrict the media through which a debt The Bureau is finalizing amendments statute, sometimes without further collector communicates by designating a to Regulation F, 12 CFR part 1006, interpretation. Restating the statutory 1 particular medium, such as email, as which implements the FDCPA. The text in this way should facilitate one that cannot be used for debt amendments prescribe Federal rules understanding and compliance by governing the activities of debt collection communications. making it possible for stakeholders to, in • Clarifies that a debt collector is collectors, as that term is defined in the general, consult only the regulation to FDCPA (debt collectors or FDCPA debt presumed to violate the FDCPA’s view relevant definitions and prohibition on repeated or continuous collectors). The final rule focuses on substantive provisions. Except where debt collection communications and telephone calls if the debt collector specifically stated, by restating the places a telephone call to a person more related practices by debt collectors. statutory text, the Bureau does not In 1977, Congress passed the FDCPA than seven times within a seven-day to eliminate abusive debt collection period or within seven days after 2 15 U.S.C. 1692(e). practices by debt collectors, to ensure 3 15 U.S.C. 1692(a). engaging in a telephone conversation that those debt collectors who refrain 4 Id. with the person. It also clarifies that a from using abusive debt collection 5 The record retention requirement in § 1006.100 debt collector is presumed to comply practices are not competitively is based on the Bureau’s rulemaking authority with that prohibition if the debt disadvantaged, and to promote under title X of the Dodd-Frank Wall Street Reform collector places a telephone call not in and Consumer Protection Act (Dodd-Frank Act), consistent State action to protect Public Law 111–203, 124 stat. 1376 (2010), but excess of either of those telephone call applies only to FDCPA debt collectors. See the frequencies. The final rule also provides 1 15 U.S.C. 1692 et seq. section-by-section analysis of § 1006.100. non-exhaustive lists of factors that may

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76735

be used to rebut the presumption of debt collection market. For example, the consumers.7 Collection activities also compliance or of a violation. final rule includes provisions clarifying can lead to repayment plans or debt • Clarifies that newer communication debt collectors’ obligation to retain restructuring that may provide technologies, such as emails and text records evidencing compliance or consumers with additional time to make messages, may be used in debt noncompliance with the FDCPA and payments or resolve their debts on more collection, with certain limitations to Regulation F; prohibiting the sale, manageable terms.8 protect consumer privacy and to protect transfer for consideration, or placement The debt collection industry includes consumers from harassment or abuse, for collection of certain debts; and creditors, third-party debt collectors false or misleading representations, or clarifying debt collectors’ obligations (including debt collection law firms), unfair practices. For example, the final when responding to duplicative debt buyers, and a wide variety of rule requires that each of a debt disputes. The final rule also clarifies related service providers. Debt collector’s emails and text messages that the personal representative of a collection is estimated to be a $12.7 must include instructions for a deceased consumer’s estate is a billion-dollar industry employing nearly reasonable and simple method by which consumer for purposes of § 1006.6, 123,000 people across approximately a consumer can opt out of receiving which addresses communications in 7,800 collection agencies in the United further emails or text messages. The connection with debt collection. This States.9 final rule also provides that a debt clarification generally allows a debt Creditors collector may obtain a safe harbor from collector to discuss a debt with the civil liability for an unintentional third- personal representative of a deceased When an account becomes party disclosure if the debt collector consumer’s estate. The final rule also delinquent, initial collection efforts follows the procedures identified in the clarifies how a debt collector may locate often are undertaken by the original rule when communicating with a the personal representative of a creditor or its servicer. The FDCPA consumer by email or text message.6 deceased consumer’s estate. typically does not cover such recovery • Defines a new term related to debt efforts and, if they result in resolution collection communications: Limited- Disclosure-Focused Final Rule of the debt, whether through payment in content message. This definition The Bureau is reserving certain full or another arrangement, the identifies what information a debt sections of Regulation F for a disclosure- consumer typically will not interact collector must and may include in a focused final rule that, as noted above, with a third-party debt collector. voicemail message for consumers (with the Bureau intends to publish in Third-Party Debt Collectors the inclusion of no other information December 2020 to clarify the permitted) for the message to be deemed information that a debt collector must If a consumer’s payment obligations not to be a communication under the provide to a consumer at the outset of remain unmet, a creditor may send the FDCPA. This definition permits a debt debt collection and to provide a model account to a third-party debt collector to collector to leave a voicemail message notice containing the information recover on the debt in the third-party for a consumer that is not a required by FDCPA section 809(a). The debt collector’s name. A creditor may communication under the FDCPA or the Bureau also plans to address in the choose to send an account to a third- final rule and therefore is not subject to disclosure-focused final rule consumer party debt collector for several reasons, certain requirements or restrictions. protection concerns related to including because the third-party debt requirements prior to furnishing collector possesses capabilities and Consumer Disclosure Provisions consumer reporting information and the expertise that the creditor lacks. Third- The FDCPA requires that a debt collection of debt that is beyond the party debt collectors usually are paid on collector provide certain disclosures to statute of limitations (i.e., time-barred a contingency basis, typically a the consumer. The final rule clarifies debt). percentage of recoveries; debt collectors the standards a debt collector must meet contracting with creditors on a when sending the required disclosures II. Background contingency basis generated a large in writing or electronically. A. Debt Collection Market Background majority of the industry’s 2019 revenue.10 Contingency debt collectors Additional Provisions A consumer debt is commonly compete with one another to secure understood to be a consumer’s The final rule addresses certain other business from creditors based on, among obligation to pay money to another consumer protection concerns in the other factors, the debt collectors’ person or entity. Sometimes a debt effectiveness in obtaining recoveries.11 6 These procedures appear in § 1006.6(d)(3) arises out of a closed-end loan. Other through (5). Throughout this Notice, the Bureau times, a debt arises from a consumer’s 7 See Bureau of Consumer Fin. Prot., Fair Debt uses the phrase ‘‘may obtain a safe harbor from civil use of an open-end line of credit, Collection Practices Act: CFPB Annual Report 2013, liability’’ to mean that a debt collector who follows at 9 (Mar. 20, 2013), https://www.consumer the procedures in § 1006.6(d)(3) through (5) may commonly a credit card. And in other finance.gov/data-research/research-reports/annual- have a bona fide error defense to civil liability cases, a debt arises from a consumer’s report-on-the-fair-debt-collection-practices-act/ under FDCPA section 813(c), 15 U.S.C. 1692k(c), for purchase of goods or services with (2013 FDCPA Annual Report). an unintentional third-party disclosure. The Bureau payment due thereafter. Often there is 8 uses the term ‘‘may’’ because, to have a bona fide See id. error defense to civil liability (i.e., to obtain what an agreed-upon payment schedule or 9 See Bureau of Consumer Fin. Prot., Fair Debt this Notice refers to, for ease of reference, as a safe date by which the consumer must repay Collection Practices Act: CFPB Annual Report 2020, harbor from civil liability), a debt collector must at 7 (Mar. 2020), https://files.consumerfinance.gov/ the debt. _ _ _ affirmatively prove compliance with both For a variety of reasons, consumers f/documents/cfpb fdcpa annual-report-congress § 1006.6(d)(3)(i) and (ii). In addition, for ease of 03-2020.pdf (2020 FDCPA Annual Report). reference, the Bureau sometimes refers to the sometimes are unable or unwilling to 10 Id. at 8. procedures in § 1006.6(d)(3) through (5) as ‘‘safe make payments when they are due. 11 While third-party collection agencies have been harbor procedures.’’ The Bureau’s use of the term Collection efforts may directly recover increasing in size in recent years, third-party debt ‘‘safe harbor’’ in the context of § 1006.6(d)(3) some or all of the overdue amounts collection continues to include a significant number through (5) is different from its use of the term of smaller entities. See Robert M. Hunt, elsewhere in this Notice, where the term refers to owed to debt owners and thereby may Understanding the Model: The Life Cycle of a Debt, actions that, when taken, permit debt collectors to indirectly help to keep consumer credit at 15, Fed. Reserve Bank of Phila. (June 6, 2013), comply with the FDCPA and Regulation F. available and more affordable to Continued

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76736 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

B. Debt Buyers Debt Collection Law Firms Other types of debt are subject to statutory or regulatory requirements that If contingency collections prove A debt owner may try to recover on a debt through litigation, either after may affect how a debt collector tries to unsuccessful—or if a particular creditor recover on them. For example, privacy prefers not to use such third-party debt unsuccessful debt collection attempts or as a primary collection activity. Most protections may affect how a debt collectors—a creditor may sell unpaid collector seeks to recover on a medical accounts to a debt buyer. In 2009, the debt collection litigation is filed in State courts. Debt owners often retain law debt, and the availability of Federal Trade Commission (FTC) called administrative wage garnishment and the advent and growth of debt buying firms and attorneys that specialize in debt collection and that are familiar tax refund intercepts may affect how a ‘‘the most significant change in the debt debt collector seeks to recover on a 12 with State and local rules. If a debt collection business’’ in recent years. Federal student loan. Debt buyers purchase defaulted debt owner obtains a judgment in its favor, post-litigation efforts may include Changes in a consumer’s situation from creditors or other debt owners and may warrant a change in a debt thereby take title to the debt. Credit card garnishment of wages or seizure of assets. collector’s recovery strategy, such as debt comprises a large majority of the when information purchased from debt that debt buyers purchase.13 Debt B. Debt Collection Methods consumer reporting agencies or other buyers generated about one-third of debt The debt collection experience is a third parties indicates that the consumer collection revenue, or about $3.5 billion, common one—approximately one in has started a new job. A debt owner also in 2017.14 Creditors who sell their three consumers with a credit record may ‘‘warehouse’’ a debt and cease uncollected debt to debt buyers receive reported having been contacted about a collection efforts for a significant a certain up-front return, but these debts debt in collection in 2014.16 Of those, 27 period. A new debt collector may later typically are sold at prices that are less percent reported having been contacted be tasked with resuming collection than their face value. Debt buyers about a single debt over the prior year, efforts because, for example, the debt typically price their offers for portfolios 57 percent reported having been owner has sold the account, detected a based upon their projections of the contacted about two to four debts, and possible change in the consumer’s amount they will be able to collect. The 16 percent reported having been financial situation, or, as part of their debt buyer incurs the risk of recovering contacted about more than four debts.17 portfolio management strategy, makes less than the sum of the amount it paid A creditor typically stops periodic attempts at some recovery. to acquire the debt and its expenses to communicating with a consumer once Each time a new debt collector obtains collect the debt. responsibility for an account has moved responsibility for collecting the debt, the Typically, a debt buyer engages in to a third-party debt collector. Active consumer likely will be subject to debt collection, attempting to collect debt collection efforts typically begin communications or communication debts itself. However, a debt buyer also with the debt collector attempting to attempts from the new debt collector. may use a third-party debt collector or locate the consumer, usually by For the consumer, this may mean a series of such debt collectors. If the identifying a valid telephone number or contact from a series of different debt debt buyer is unable to collect some of mailing address, so that the debt collectors over a number of years for a the debts it purchased, the debt buyer collector can establish contact with the single debt. During this time, the may sell the debt again to another debt consumer. To obtain current contact consumer may make payments to buyer. Any single debt thus may be information, a debt collector may look multiple debt collectors or may receive owned by multiple entities over its to information that transferred with the communication attempts from multiple lifetime. The price paid for a debt account file, public records, data sellers, debt collectors that may stop and restart generally will decline as the debt ages or proprietary databases of contact at irregular intervals, until the debt is and passes from debt buyer to debt information. A debt collector may also paid or settled in full or collection buyer, because the probability of attempt to obtain location information activity ceases for other reasons. payment decreases.15 for a consumer from third parties, such C. Consumer Protection Concerns as family members who share a https://www.ftc.gov/sites/default/files/documents/ residence with the consumer or Each year, consumers submit tens of public_events/life-debt-data-integrity-debt- colleagues at the consumer’s workplace. thousands of complaints about debt collection/understandingthemodel.pdf. Once a debt collector has obtained collection to Federal regulators; 18 many 12 Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry, at i (Jan. contact information for a consumer, the debt collector typically will seek to 18 See, e.g., 2020 FDCPA Annual Report, supra 2013), https://www.ftc.gov/sites/default/files/ note 9, at 13; Fed. Trade Comm’n, 2019 Consumer documents/reports/structure-and-practices-debt- communicate with the consumer to Sentinel Network Databook, at 7 (Jan. 2020), https:// buying-industry/debtbuyingreport.pdf (FTC Debt obtain payment on some or all of the www.ftc.gov/system/files/documents/reports/ Buying Report). debt. The debt collector may tailor the consumer-sentinel-network-data-book-2019/ 13 Id. at 7 (citing Credit Card Debt Sales in 2008, _ _ _ _ _ collection strategy depending on a consumer sentinel network data book 2019.pdf; 921 Nilson Rep. 10 (Mar. 2009)). Bureau of Consumer Fin. Prot., Fair Debt Collection 14 Bureau of Consumer Fin. Prot., Fair Debt variety of factors, including the size and Practices Act: CFPB Annual Report 2020, at 15–16 Collection Practices Act: CFPB Annual Report 2018, age of the debt and the debt collector’s (Mar. 2019), https://files.consumerfinance.gov/f/ at 10 (Mar. 2018), https:// documents/cfpb_fdcpa_annual-report-congress_03- _ assessment of the likelihood of files.consumerfinance.gov/f/documents/cfpb obtaining money from the consumer. 2019.pdf (2019 FDCPA Annual Report); Fed. Trade fdcpa_annual-report-congress_03-2018.pdf (2018 Comm’n, 2018 Consumer Sentinel Network FDCPA Annual Report) (citing Edward Rivera, Debt Databook, at 4, 7 (Feb. 2019), https://www.ftc.gov/ Collection Agencies in the US, IBIS World (Dec. 16 Bureau of Consumer Fin. Prot., Consumer system/files/documents/reports/consumer-sentinel- 2017)). Although debt buyers represent about one- Experience with Debt Collection: Findings from network-data-book-2018/consumer_sentinel_ third of industry revenue, this overstates debt CFPB’s Survey of Consumer Views on Debt, at 5 network_data_book_2018_0.pdf; 2018 FDCPA buyers’ share of dollars collected, since debt buyer (2017), http://files.consumerfinance.gov/f/ Annual Report, supra note 14, at 14–15; Fed. Trade revenue includes all amounts recovered, whereas documents/201701_cfpb_Debt-Collection-Survey- Comm’n, 2017 Consumer Sentinel Network the revenue of contingency debt collectors includes Report.pdf (CFPB Debt Collection Consumer Databook, at 3, 6 (Mar. 2018), https://www.ftc.gov/ only the share of recoveries retained by the debt Survey). This figure includes consumers contacted system/files/documents/reports/consumer-sentinel- collector. Id. only by creditors as well as those contacted by one network-data-book-2017/consumer_sentinel_data_ 15 FTC Debt Buying Report, supra note 12, at 23– or more debt collection firms. Id. at 13. book_2017.pdf; Bureau of Consumer Fin. Prot., 24. 17 Id. 2017 Fair Debt Collection Practices Act: CFPB

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76737

of those complaints relate to practices consumers.’’ 21 Congress found that III. The Rulemaking Process addressed in the final rule. Consumers ‘‘[t]here [was] abundant evidence of the A. The 2019 Proposal and 2020 also file thousands of private actions use of abusive, deceptive, and unfair Supplemental Proposal each year against debt collectors who debt collection practices by many debt allegedly have violated the FDCPA. collectors’’ and that these practices On May 21, 2019, the Bureau Since the Bureau began operations in ‘‘contribute to the number of personal published a proposed rule (the 2011, it has brought numerous debt bankruptcies, to marital instability, to proposal) in the Federal Register to collection cases against third-party debt the loss of jobs, and to invasions of amend Regulation F, which implements 25 collectors, alleging both FDCPA individual privacy.’’ 22 the FDCPA. The proposal provided a violations and unfair, deceptive, or 90-day comment period that would have abusive debt collection acts or practices The FDCPA was enacted, in part, ‘‘to closed on August 19, 2019. To allow in violation of the Dodd-Frank Act.19 In eliminate abusive debt collection interested persons more time to many of these cases, the Bureau has practices by debt collectors, [and] to consider and submit their comments, obtained civil penalties, monetary insure that those debt collectors who the Bureau issued an extension of the compensation for consumers, and other refrain from using abusive debt comment period until September 18, relief. In its supervisory work, the collection practices are not 2019.26 In response to the proposal, the Bureau similarly has identified many competitively disadvantaged.’’ 23 Bureau received more than 14,000 FDCPA violations during examinations Among other things, the FDCPA: (1) comments from consumers, consumer of debt collectors. Over the past decade, Prohibits debt collectors from engaging groups, members of Congress, other the FTC and State regulators also have in harassment or abuse, making false or government agencies, creditors, debt brought numerous additional actions misleading representations, and collectors, industry trade associations, against debt collectors for violating engaging in unfair practices in debt and others. As discussed below, the Federal and State debt collection and collection; (2) restricts debt collectors’ Bureau has considered these comments consumer protection laws. communications with consumers and in adopting this final rule.27 others; and (3) requires debt collectors In the proposal, the Bureau proposed D. FDCPA and Dodd-Frank Act to provide consumers with disclosures to address concerns about debt Protections for Consumers concerning the debts they owe or collection communications and to Federal and State governments allegedly owe. clarify the application of the FDCPA to newer communication technologies, to historically have sought to protect The FDCPA, in general, applies to clarify the steps a debt collector must consumers from harmful debt collection debt collectors as that term is defined take to provide required disclosures in practices. From 1938 to 1977, the under the statute. As discussed further Federal government primarily protected writing and electronically, to clarify the in the section-by-section analysis of information that a debt collector must consumers through FTC enforcement § 1006.2(i), the FDCPA generally actions against debt collectors who provide to a consumer at the outset of provides that a debt collector is any debt collection, and to address other engaged in unfair or deceptive acts or person: (1) Who uses any practices in violation of section 5 of the consumer protection concerns in the instrumentality of interstate commerce debt collection market. The proposal, FTC Act.20 When Congress enacted the or the mails in any business the FDCPA in 1977, it found that ‘‘[e]xisting among other things, proposed to set a principal purpose of which is the bright-line rule for telephone call laws and procedures for redressing . . . collection of any debts (i.e., the injuries [were] inadequate to protect frequency and proposed a model form ‘‘principal purpose’’ prong), or (2) who for providing the information required regularly collects, or attempts to collect, by FDCPA section 809(a). These Annual Report 2017, at 15–16 (Mar. 2017), https:// directly or indirectly, debts owed or due files.consumerfinance.gov/f/documents/201703_ interventions, along with the many cfpb_Fair-Debt-Collection-Practices-Act-Annual- or asserted to be owed or due to another others included in the proposal, Report.pdf (2017 FDCPA Annual Report); Fed. (i.e., the ‘‘regularly collects’’ prong). generated a robust response. While Trade Comm’n, Consumer Sentinel Network Data FDCPA section 803(6) also sets forth some consumers and consumer Book for January–December 2016, at 3, 6 (Mar. several exclusions from the general 2017), https://www.ftc.gov/system/files/documents/ advocate commenters supported various reports/consumer-sentinel-network-data-book- definition. aspects of the proposal, in general they january-december-2016/csn_cy-2016_data_ Until the creation of the Bureau, no questioned whether the proposal book.pdf. provided adequate protection for 19 See, e.g., Stipulated Final Judgment and Federal agency was authorized to issue Consent Order, Consumer Fin. Prot. Bureau v. regulations to implement the consumers. Similarly, while some Encore Capital Grp., Inc., 3:20-cv-01750 (S.D. Cal. substantive provisions of the FDCPA. industry commenters supported various Oct. 15, 2020), https://www.courtlistener.com/ Courts have issued opinions providing aspects of the proposal, in general they recap/gov.uscourts.casd.686719/ questioned whether the proposal gov.uscourts.casd.686719.5.1.pdf; Consent Order, In differing interpretations of various re Asset Recovery Assocs., 2019–BCFP–0009 (Aug. FDCPA provisions, and there is provided sufficient clarity to allow for 28, 2019), https://www.consumerfinance.gov/ considerable uncertainty with respect to compliance or was properly tailored to _ _ documents/7938/cfpb asset-recovery-associates how the FDCPA applies to the consumer protection problems and consent-order_2019-08.pdf; Consent Order, In re evidence at hand. Encore Capital Grp., Inc., 2015–CFPB–0022 (Sept. communication technologies that have 9, 2015), http://files.consumerfinance.gov/f/ developed since 1977. The Dodd-Frank 201509_cfpb_consent-order-encore-capital- Act amended the FDCPA to provide the 25 See 84 FR 23274 (May 21, 2019). 26 group.pdf; Consent Order, In re Portfolio Recovery Bureau with authority to ‘‘prescribe 84 FR 37806 (Aug. 2, 2019). Assocs., LLC, 2015–CFPB–0023 (Sept. 9, 2015), 27 The Bureau received feedback asking the http://files.consumerfinance.gov/f/201509_cfpb_ rules with respect to the collection of Bureau to include in the final rule certain consent-order-portfolio-recovery-associates-llc.pdf; debts by debt collectors.’’ 24 interventions that the Bureau did not propose; Complaint, Consumer Fin. Prot. Bureau v. Nat’l many such comments addressed debt collectors’ Corrective Grp., Inc., 1:15–cv–00899–RDB (D. Md. obligation to substantiate debts. The Bureau 21 Mar. 30, 2015), http://files.consumerfinance.gov/f/ 15 U.S.C. 1692(b). concludes that it is not advisable to finalize such 201503_cfpb_complaint-national-corrective- 22 15 U.S.C. 1692(a). interventions without the benefit of public notice group.pdf. 23 15 U.S.C. 1692(e). and comment and therefore does not address such 20 15 U.S.C. 45. 24 FDCPA section 814(d), 15 U.S.C. 1692l(d). comments further in this Notice.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76738 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

On February 21, 2020, the Bureau web survey of approximately 8,000 gathered information from the small released a supplemental notice of individuals possessing a broad range of entity representatives and made proposed rulemaking to amend demographic characteristics to obtain findings and recommendations Regulation F to require debt collectors additional information about consumer regarding the potential compliance costs to make certain disclosures when comprehension and decision-making in and other impacts on those entities of collecting time-barred debts (the response to sample debt collection the proposals under consideration. February 2020 proposal).28 Time-barred disclosures relating to time-barred debt. Those findings and recommendations debts are debts for which the applicable A report summarizing the findings of are set forth in the Small Business statute of limitations has expired. The this testing was published in connection Review Panel Report, which is part of February 2020 proposal provided a 60- with the February 2020 proposal.33 the administrative record in this day comment period that would have To better understand the operational rulemaking and is available to the closed on May 4, 2020. To allow costs of debt collection firms, including public.37 The Bureau considered these interested persons more time to law firms, the Bureau also surveyed findings and recommendations in consider and submit their comments, debt collection firms and vendors and preparing the proposals and this final the Bureau issued two extensions of the published a report based on that study rule. comment period, the first until June 5, in July 2016 (CFPB Debt Collection The Bureau has also met on many 2020 and the second until August 4, Operations Study or Operations occasions with various stakeholders, 2020.29 As noted above, the Bureau Study).34 The Operations Study focused including consumer advocacy groups, intends to issue a disclosure-focused on understanding how debt collection debt collection trade associations, final rule regarding the February 2020 firms obtain information about industry participants, academics with proposal and certain provisions of the delinquent consumer accounts and expertise in debt collection, Federal May 2019 proposal related to consumer attempt to collect on those accounts. prudential regulators, and other Federal disclosures and to the collection of In August 2016, the Bureau convened and State consumer protection time-barred debt. a Small Business Review Panel (Small regulators. The Bureau also received a Business Review Panel or Panel) with B. Other Outreach 30 number of comments specific to the the Chief Counsel for Advocacy of the debt collection rulemaking in response In November 2013, the Bureau began Small Business Administration (SBA) to its Request for Information Regarding the rulemaking process with the and the Administrator of the Office of the Bureau’s Adopted Regulations and publication of an Advance Notice of Information and Regulatory Affairs with New Rulemaking Authorities 38 and its Proposed Rulemaking (ANPRM) the Office of Management and Budget Request for Information Regarding the 31 regarding debt collection. As (OMB).35 As part of this process, the Bureau’s Inherited Regulations and discussed in the proposal, the ANPRM Bureau prepared an outline of proposals Inherited Rulemaking Authorities; 39 the sought information about a wide variety under consideration and the alternatives Bureau considered these comments in of both first- and third-party debt considered (Small Business Review developing the proposals and this final collection practices. The Bureau Panel Outline or Outline),36 which the rule. In addition, the Bureau has received more than 23,000 comments in Bureau posted on its website for review engaged in general outreach, speaking at response to the ANPRM, which the by the small entity representatives consumer advocacy group and industry Bureau considered when developing the participating in the Panel process and events and visiting consumer proposal. by the general public. The Panel organizations and industry stakeholders. The Bureau also conducted a variety The Bureau has provided other of consumer testing and surveys, 33 Bureau of Consumer Fin. Prot., Disclosure of beginning in 2014 when the Bureau regulators with information about the Time-Barred Debt and Revival: Finding from CFPB’s proposals and this final rule, has sought contracted with a third-party vendor, Quantitative Disclosure Testing (Feb. 2020), https:// files.consumerfinance.gov/f/documents/cfpb_debt- their input, and has received feedback Fors Marsh Group (FMG), to develop _ and conduct qualitative consumer collection-quantitative-disclosure-testing report.pdf that has helped the Bureau to prepare (CFPB Quantitative Testing Report). this final rule. testing of two potential consumer-facing 34 See generally Bureau of Consumer Fin. Prot., Under the Dodd-Frank Act, the debt collection model disclosure forms: Study of Third-Party Debt Collection Operations Bureau is required to conduct an the validation notice and the statement (July 2016), https://www.consumerfinance.gov/ documents/755/20160727_cfpb_Third_Party_Debt_ assessment of significant rules within of consumer rights. The Bureau also _ _ conducted a nationwide survey of Collection Operations Study.pdf (CFPB Debt five years of the rule’s effective date. Collection Operations Study). The Bureau anticipates that this final consumers’ experiences with debt 35 The Small Business Regulatory Enforcement rule may be significant and therefore collection and published a report of the Fairness Act of 1996 (SBREFA), as amended by findings in January 2017 (CFPB Debt section 1100G(a) of the Dodd-Frank Act, requires may require an assessment within five Collection Consumer Survey or the Bureau to convene a Small Business Review years of the rule’s effective date. The Panel before proposing a rule that may have a Consumer Survey).32 In 2017, the Bureau is preparing now for this substantial economic impact on a significant possible assessment. Specifically, the Bureau contracted with ICF number of small entities. See Public Law 104–121, International, Inc. (ICF) to conduct a tit. II, 110 stat. 857 (1996) (as amended by the Small Bureau is considering how best to Business and Work Opportunity Act of 2007, Public obtain information now to serve as a Law 110–28, tit. VIII, subtit. C, sec. 8302, 121 stat. 28 baseline for evaluation of the costs, See 85 FR 12672 (Mar. 3, 2020). 204 (2007)). 29 benefits, and other effects of the final See 85 FR 17299 (Mar. 27, 2020) (first 36 Bureau of Consumer Fin. Prot., Small Business extension) and 85 FR 30890 (May 21, 2020) (second Review Panel for Debt Collector and Debt Buyer extension). Rulemaking: Outline of Proposals Under 37 Bureau of Consumer Fin. Prot., U.S. Small Bus. 30 The preamble to the proposal includes a more Consideration and Alternatives Considered (July 28, Admin. & Office of Mgmt. & Budget, Final Report thorough discussion of the outreach the Bureau 2016), https://files.consumerfinance.gov/f/ of the Small Business Review Panel on the CFPB’s conducted prior to issuing the proposal. See 84 FR documents/20160727_cfpb_Outline_of_ Proposals Under Consideration for the Debt 23274, 23278–80 (May 21, 2019). proposals.pdf (Small Business Review Panel Collector and Debt Buying Rulemaking (Oct. 2016), 31 78 FR 67848 (Nov. 12, 2013). Outline). The Bureau also gathered feedback on the https://files.consumerfinance.gov/f/documents/ _ _ 32 CFPB Debt Collection Consumer Survey, supra Small Business Review Panel Outline from other cfpb debt-collector-debt-buyer SBREFA-report.pdf note 16. The survey was approved under OMB stakeholders, members of the public, and the (Small Business Review Panel Report). control number 3170–0047, Debt Collection Survey Bureau’s Consumer Advisory Board and 38 83 FR 12286 (Mar. 21, 2018). from the Consumer Credit Panel. Community Bank Advisory Council. 39 83 FR 12881 (Mar. 26, 2018).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76739

rule. The Bureau expects to collect data through 808 of the FDCPA. Parts IV.B Interpreting General Provisions in Light and other information from consumers, through E discuss the Bureau’s relevant of Specific Prohibitions or Requirements debt collectors, and other stakeholders authorities under the Dodd-Frank Act By their plain terms, FDCPA sections to understand whether the rule is and the Electronic Signatures in Global 806 through 808 make clear that their achieving its goals under the FDCPA and National Commerce Act (E–SIGN examples of prohibited conduct do not and the Dodd-Frank Act, and to help the Act).44 ‘‘limit[ ] the general application’’ of Bureau measure the costs and benefits A. FDCPA Sections 806 Through 808 those sections’ general prohibitions. The of the rule. Topics of data collection FDCPA’s legislative history is consistent could include: Whether consumers find As discussed in part V, the Bureau is with this understanding,52 as are themselves less harassed by calls from finalizing several provisions, in whole opinions by courts that have addressed debt collectors; whether debt collectors or in part, pursuant to its authority to this issue.53 Accordingly, the Bureau are better able to understand how to interpret FDCPA sections 806, 807, and may interpret the general provisions of communicate with consumers using 808, which set forth general FDCPA sections 806 to 808 to prohibit modern technology in a way that prohibitions on, and requirements conduct that the specific examples in complies with the FDCPA; whether FDCPA sections 806 through 808 do not greater clarity about FDCPA relating to, debt collectors’ conduct and are accompanied by non-exhaustive lists address if the conduct violates the requirements helps reduce litigation; general prohibitions. and costs of the rule, both anticipated of examples of unlawful conduct. This section provides an overview of how the The Bureau uses the specific and unexpected, for consumers or for examples in FDCPA sections 806 industry. The Bureau expects to conduct Bureau interprets FDCPA sections 806 through 808. through 808 to inform its interpretation outreach in 2021 to explore how best to of those sections’ general prohibitions. obtain such data, including potentially FDCPA section 806 generally Accordingly, the final rule interprets the through surveying consumers or firms prohibits a debt collector from general provisions of FDCPA sections or by collecting operational data. ‘‘engag[ing] in any conduct the natural 806 through 808 to prohibit or require IV. Legal Authority consequence of which is to harass, certain conduct that is similar to the oppress, or abuse any person in types of conduct prohibited or required The Bureau is issuing this final rule connection with the collection of a by the specific examples. For example, primarily pursuant to its authority debt.’’ 45 Then, ‘‘[w]ithout limiting the the final rule interprets the general under the FDCPA and the Dodd-Frank general application of the foregoing,’’ it provisions in FDCPA sections 806 Act. As amended by the Dodd-Frank lists six examples of conduct that through 808 as protecting consumer Act, FDCPA section 814(d) provides that violate that section.46 Similarly, FDCPA privacy in debt collection in ways the Bureau ‘‘may prescribe rules with section 807 generally prohibits a debt similar to the specific restrictions in: (1) respect to the collection of debts by debt collector from ‘‘us[ing] any false, 40 FDCPA section 806(3), which prohibits, collectors,’’ as defined in the FDCPA. deceptive, or misleading representation with certain exceptions, the publication Section 1022(a) of the Dodd-Frank Act or means in connection with the of a list of consumers who allegedly provides that ‘‘[t]he Bureau is collection of any debt.’’ 47 Then, refuse to pay debts; 54 (2) FDCPA section authorized to exercise its authorities ‘‘[w]ithout limiting the general 808(7), which prohibits communicating under Federal consumer financial law to application of the foregoing,’’ section with a consumer regarding a debt by administer, enforce, and otherwise 807 lists 16 examples of conduct that postcard; and (3) FDCPA section 808(8), implement the provisions of Federal violate that section.48 Finally, FDCPA which prohibits the use of certain consumer financial law.’’ 41 Section section 808 prohibits a debt collector language and symbols on envelopes.55 1022(b)(1) of the Dodd-Frank Act from ‘‘us[ing] unfair or unconscionable The interpretative approach of looking provides that the Director may prescribe to specific provisions to inform general rules and issue orders and guidance, as means to collect or attempt to collect any debt.’’ 49 Then, ‘‘[w]ithout limiting provisions is consistent with judicial may be necessary or appropriate to decisions indicating that the general enable the Bureau to administer and the general application of the foregoing,’’ FDCPA section 808 lists prohibitions in the FDCPA should be carry out the purposes and objectives of interpreted ‘‘in light of [their] the Federal consumer financial laws, eight examples of conduct that violate 50 56 42 that section. The Bureau interprets associates.’’ For example, courts have and to prevent evasions thereof. held that violating a consumer’s privacy ‘‘Federal consumer financial law’’ FDCPA sections 806 through 808 in light of: (1) The FDCPA’s language and interest through public exposure of a includes title X of the Dodd-Frank Act debt violates the FDCPA, noting that and the FDCPA.43 No provisions in this purpose; (2) the general types of final rule are based on section 1031 of conduct prohibited by those sections and, where relevant, the specific 52 See, e.g., S. Rep. No. 382, 95th Cong., 1st Sess. the Dodd-Frank Act. 2, 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, These and other authorities are examples enumerated in those sections; 1698 (S. Rep. No. 382) (‘‘[T]his bill prohibits in discussed in greater detail in parts IV.A and (3) judicial decisions.51 general terms any harassing, unfair, or deceptive through E below. Part IV.A discusses the collection practice. This will enable the courts, where appropriate, to proscribe other improper 44 15 U.S.C. 7001 et seq. Bureau’s authority under sections 806 conduct which is not specifically addressed.’’). 45 15 U.S.C. 1692d. Courts have also cited legislative history in noting 46 40 15 U.S.C. 1692l(d). As noted, the Bureau is the 15 U.S.C. 1692d(1)–(6). that, ‘‘in passing the FDCPA, Congress identified first Federal agency with authority to prescribe 47 15 U.S.C. 1692e. abusive collection attempts as primary motivations substantive debt collection rules under the FDCPA. 48 15 U.S.C. 1692e(1)–(16). for the Act’s passage.’’ Hart v. FCI Lender Servs., Prior to the Dodd-Frank Act’s grant of authority to 49 15 U.S.C. 1692f. Inc., 797 F.3d 219, 226 (2d Cir. 2015). the Bureau, the FTC published various materials 50 15 U.S.C. 1692f(1)–(8). 53 See, e.g., Stratton v. Portfolio Recovery Assocs., providing guidance on the FDCPA. The FTC’s 51 Where the Bureau prescribes requirements LLC, 770 F.3d 443, 450 (6th Cir. 2014) (‘‘[T]he listed materials have informed the Bureau’s rulemaking pursuant only to its authority to implement and examples of illegal acts are just that—examples.’’). and, if relevant to particular provisions, are interpret sections 806 through 808 of the FDCPA, 54 15 U.S.C. 1692d(3). discussed in part V. the Bureau does not take a position on whether 55 15 U.S.C. 1692f(7)–(8). 41 12 U.S.C. 5512(a). such practices also would constitute an unfair, 56 Currier v. First Resolution Inv. Corp., 762 F.3d 42 12 U.S.C. 5512(b)(1). deceptive, or abusive act or practice under section 529, 534 (6th Cir. 2014) (citing Limited, Inc. v. 43 12 U.S.C. 5481(12)(H), (14). 1031 of the Dodd-Frank Act. Comm’r, 286 F.3d 324, 332 (6th Cir. 2002)).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76740 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

violating a consumer’s privacy is a type debt,’’ 62 such as by failing to disclose Courts have reasoned, and the Bureau of conduct prohibited by several that an amount collected includes agrees, that ‘‘[w]hether a consumer is specific examples.57 In this way, the fees.63 more or less likely to be harassed, Bureau uses the specific examples in Several courts have applied an oppressed, or abused by certain debt FDCPA sections 806 through 808 to objective standard of an collection practices does not relate inform its understanding of the general ‘‘unsophisticated’’ or ‘‘least solely to the consumer’s relative provisions, consistent with the statute’s sophisticated’’ consumer to FDCPA sophistication’’ and may be affected by use of the phrase ‘‘[w]ithout limiting the sections 807 64 and 808 65 and an other circumstances, such as the general application of the foregoing’’ to objective, vulnerable consumer standard consumer’s financial and legal introduce the specific examples.58 to FDCPA section 806.66 In determining resources.68 Courts have further whether particular acts violate FDCPA reasoned that section 807’s prohibition Judicial Decisions sections 806 through 808, the Bureau on false, deceptive, or misleading The Bureau interprets the general interprets those sections to incorporate representations incorporates an prohibitions in FDCPA sections 806 ‘‘an objective standard’’ that is designed objective, ‘‘unsophisticated’’ consumer through 808 in light of the significant to protect consumers who are ‘‘of below- standard.69 This standard ‘‘protects the body of existing court decisions average sophistication or intelligence’’ consumer who is uninformed, naive, or interpreting those provisions, which or who are ‘‘especially vulnerable to trusting, yet it admits an objective provide instructive examples of fraudulent schemes.’’ 67 element of reasonableness.’’ 70 The collection practices that are not Bureau agrees with the reasoning of addressed by the specific prohibitions 62 Fields v. Wilber Law Firm, P.C., 383 F.3d 562, courts that have applied this standard or in those sections but that nonetheless 565–66 (7th Cir. 2004) (reversing dismissal of a ‘‘least sophisticated consumer’’ plaintiff’s claims brought under sections 807 and run afoul of the FDCPA’s general 71 808 because dunning letter that failed to standard. The Bureau uses the term prohibitions in sections 806 through communicate that total amount due included unsophisticated consumer to describe 808.59 For example, courts have held attorneys’ fees ‘‘could conceivably mislead an the standard it applies when assessing that a debt collector could violate unsophisticated consumer’’). the effect of conduct on consumers. FDCPA section 808 by using coercive 63 Id. tactics such as citing speculative legal 64 Jensen v. Pressler & Pressler, 791 F.3d 413, 419 FDCPA’s Purposes (3d Cir. 2015) (‘‘The standard is an objective one, consequences to pressure the consumer meaning that the specific plaintiff need not prove FDCPA section 802 establishes that to engage with the debt collector.60 that she was actually confused or misled, only that the purpose of the statute is to eliminate Additionally, courts have held that a the objective least sophisticated debtor would be.’’); abusive debt collection practices by debt debt collector could violate FDCPA Hartman v. Great Seneca Fin. Corp., 569 F.3d 606, collectors, to ensure that debt collectors 613 (6th Cir. 2009) (applying least sophisticated sections 806 through 808 by taking consumer standard to section 807 claim); Bentley v. who refrain from using abusive debt certain actions to collect a debt that a Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d collection practices are not consumer does not actually owe or that Cir. 1993) (same); Swanson v. S. Or. Credit Serv., competitively disadvantaged, and to is not actually delinquent.61 Similarly, a Inc., 869 F.2d 1222, 1227 (9th Cir. 1988) (per promote consistent State action to curiam) (same). debt collector could violate FDCPA 65 protect consumers against debt See, e.g., Crawford v. LVNV Funding, LLC, 758 72 section 807 by, for example, giving ‘‘a F.3d 1254, 1258 (11th Cir. 2014) (‘‘[W]e have collection abuses. In particular, false impression of the character of the adopted a ‘least-sophisticated consumer standard to FDCPA section 802 delineates certain evaluate whether a debt collector’s conduct is specific harms that the general and 57 See id. at 535. ‘deceptive,’ ‘misleading,’ ‘unconscionable,’ or specific prohibitions in sections 806 58 15 U.S.C. 1692d–1692f. ‘unfair’ under the statute.’’); LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1200–01 (11th Cir. 59 This interpretive approach is consistent with 1994) (quoting Clomon v. Jackson, 988 F.2d 1314, courts’ reasoning that these general prohibitions 2010) (per curiam) (applying least sophisticated consumer standard to section 808 claim); Turner v. 1319 (2d Cir. 1993))). should be interpreted in light of conduct that courts 68 Jeter, 760 F.2d at 1179 (‘‘[R]ather, such have already found violate them. See, e.g., Todd v. J.V.D.B. & Assocs., Inc., 330 F.3d 991, 997 (7th Cir. susceptibility might be affected by other Collecto, Inc., 731 F.3d 734, 739 (7th Cir. 2013). 2003) (applying unsophisticated consumer standard circumstances of the consumer or by the While judicial decisions inform the Bureau’s to section 808 claim). Circuit courts have also held, relationship between the consumer and the debt interpretation of the general prohibitions in FDCPA for example, that the least sophisticated consumer collection agency. For example, a very intelligent sections 806 through 808, the Bureau does not standard applies to a consumer’s understanding of and sophisticated consumer might well be adopt specific judicial interpretations through its a validation notice required under FDCPA section susceptible to harassment, oppression, or abuse restatement of the general prohibitions except 809 and threats to take legal action under FDCPA because he is poor (i.e., has limited access to the where noted. section 807(5). See Swanson, 869 F.2d at 1225–27; legal system), is on probation, or is otherwise at the 60 Wilson v. Quadramed Corp., 225 F.3d 350, 353 (3d See, e.g., Hosseinzadeh v. M.R.S. Assocs., Inc., mercy of a power relationship.’’). 387 F. Supp. 2d 1104, 1117 (C.D. Cal. 2005) Cir. 2000). 66 69 See Brief for the United States as Amicus (denying debt collector’s motion for summary For example, in Jeter v. Credit Bureau, Inc., 760 Curiae Supporting Respondents, supra note 67, at judgment on section 808 claim where debt collector F.2d 1168, 1179 (11th Cir. 1985), the court applied *10, 27–30. used false name and implied that consumer ‘‘would a standard analogous to the ‘‘least sophisticated 70 have legal problems’’ if consumer did not return consumer’’ to an FDCPA section 806 claim, holding Gammon, 27 F.3d at 1257. debt collector’s telephone call). that claims under section 806 ‘‘should be viewed 71 See, e.g., Rosenau v. Unifund Corp., 539 F.3d 61 See, e.g., Ferrell v. Midland Funding, LLC, No. from the perspective of a consumer whose 218, 221 (3d Cir. 2008) (‘‘We use the ‘least 2:15–cv–00126–JHE, 2015 WL 2450615, at *3–4 circumstances makes him relatively more sophisticated debtor’ standard in order to effectuate (N.D. Ala. May 22, 2015) (denying debt collector’s susceptible to harassment, oppression, or abuse.’’ the basic purpose of the FDCPA: To protect all motion to dismiss section 806 claim where debt 67 See, e.g., Brief for the Consumer Financial consumers, the gullible as well as the shrewd.’’) collector allegedly initiated collection lawsuit even Protection Bureau in Support of Appellee and (citations and some internal quotation marks though it knew plaintiff did not owe debt); Fox v. Affirmance at 13, DeGroot v. Client Servs., Inc., omitted); Clomon, 988 F.2d at 1319 (‘‘To serve the Citicorp Credit Servs., Inc., 15 F.3d 1507, 1517 (9th 2020 WL 5951360 (7th Cir. 2020) (No. 20–1089), purposes of the consumer-protection laws, courts Cir. 1994) (reversing grant of summary judgment to https://www.consumerfinance.gov/documents/ have attempted to articulate a standard for debt collector in part because ‘‘a jury could 8865/cfpb_amicus-brief_degroot-v-client- evaluating deceptiveness that does not rely on rationally find’’ that filing writ of garnishment was services.pdf (explaining that whether a debt assumptions about the ‘average’ or ‘normal’ unfair or unconscionable under section 808 when collection notice is deceptive is ‘‘ ‘an objective consumer. This effort is grounded, quite sensibly, debt was not delinquent); Pittman v. J.J. Mac Intyre test’ ’’ based on a ‘‘hypothetical unsophisticated in the assumption that consumers of below-average Co. of Nev., Inc., 969 F. Supp. 609, 612–13 (D. Nev. consumer’’) (citation omitted); Brief for the United sophistication or intelligence are especially 1997) (denying debt collector’s motion to dismiss States as Amicus Curiae Supporting Respondents, vulnerable to fraudulent schemes. The least- claims under sections 807 and 808 where debt Sheriff v. Gillie, 136 S. Ct. 1594 (2016) (No. 15–338), sophisticated-consumer standard protects these collector allegedly attempted to collect fully 2016 WL 836755, at *29 (quoting Gammon v. GC consumers in a variety of ways.’’). satisfied debt). Servs. Ltd. P’ship, 27 F.3d 1254, 1257 (7th Cir. 72 15 U.S.C. 1692(e).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76741

through 808 were designed to alleviate. and guidance, as may be necessary or V. Section-by-Section Analysis Section 802 states: ‘‘[T]he use of appropriate to enable the Bureau to Subpart A—In General abusive, deceptive, and unfair debt administer and carry out the purposes collection practices by many debt and objectives of the Federal consumer Section 1006.1 Authority, Purpose, collectors . . . contribute[s] to the financial laws, and to prevent evasions and Coverage number of personal bankruptcies, to thereof.’’ 76 ‘‘Federal consumer financial 1(a) Authority marital instability, to the loss of jobs, laws’’ include the FDCPA and title X of and to invasions of individual the Dodd-Frank Act.77 Section Existing § 1006.1(a) states that the 73 privacy.’’ 1022(b)(2) of the Dodd-Frank Act purpose of part 1006, known as B. Dodd-Frank Act Section 1031 prescribes certain standards for Regulation F, is to establish procedures rulemaking that the Bureau must follow and criteria for any State to request that The Bureau proposed to rely on its the Bureau exempt debt collection Dodd-Frank Act section 1031 authority in exercising its authority under Dodd- 78 practices within that State from the (relating to unfair, deceptive, or abusive Frank Act section 1022(b)(1). See part VII for a discussion of the Bureau’s requirements of the FDCPA as provided acts or practices in connection with in FDCPA section 817. Consistent with standards for rulemaking under Dodd- consumer financial products or services) the Bureau’s proposal to revise part Frank Act section 1022(b)(2). to support two interventions in the 1006 to regulate the debt collection proposal. As discussed in more detail in Dodd-Frank Act section 1024(b)(7)(A) activities of FDCPA debt collectors, the the section-by-section analysis of authorizes the Bureau to prescribe rules Bureau proposed to revise existing §§ 1006.14 and 1006.30, the Bureau is to facilitate supervision of persons § 1006.1(a) to set forth the Bureau’s not finalizing any provisions of the rule identified as larger participants of a authority to issue such rules.79 pursuant to its authority under Dodd- market for a consumer financial product Specifically, proposed § 1006.1(a) stated Frank Act section 1031. or service as defined by rule in that part 1006 is known as Regulation F C. Dodd-Frank Act Section 1032 accordance with section 1024(a)(1)(B) of and is issued by the Bureau pursuant to sections 814(d) and 817 of the FDCPA,80 Dodd-Frank Act section 1032(a) the Dodd-Frank Act. Dodd-Frank Act section 1024(b)(7)(B) authorizes the title X of the Dodd-Frank Act,81 and provides that the Bureau may prescribe section 104(b)(1) and (d)(1) of the E– rules to ensure that the features of any Bureau to require a person described in Dodd-Frank Act section 1024(a)(1) to SIGN Act.82 The Bureau proposed to consumer financial product or service, move the remainder of existing ‘‘both initially and over the term of the retain records for the purpose of facilitating supervision of such persons § 1006.1(a), regarding State law product or service,’’ are ‘‘fully, exemptions from the FDCPA, to accurately, and effectively disclosed to and assessing and detecting risks to consumers. As discussed in the section- paragraph I(a) of appendix A of the consumers in a manner that permits regulation. consumers to understand the costs, by-section analysis, the Bureau is benefits, and risks associated with the finalizing § 1006.100 pursuant to the The Bureau did not receive comments product or service, in light of the facts Bureau’s authorities under Dodd-Frank on proposed § 1006.1(a). Pursuant to its and circumstances.’’ 74 Under Dodd- Act sections 1022 and 1024. authority under FDCPA section 814(d), Frank Act section 1032(a), the Bureau is the Bureau is finalizing § 1006.1(a) empowered to prescribe rules regarding E. The E–SIGN Act largely as proposed. However, the the disclosure of the ‘‘features’’ of Bureau is removing section 104(d)(1) of The E–SIGN Act provides standards the E–SIGN Act from the list of consumer financial products and for determining if delivery of a services generally. Accordingly, the authorizing statutory provisions disclosure by electronic record satisfies because, as discussed in the section-by- Bureau may prescribe rules containing a requirement in a statute, regulation, or disclosure requirements even if other section analysis of § 1006.42, the Bureau other rule of law that the disclosure be Federal consumer financial laws do not is not relying on that provision as provided or made available in writing to specifically require disclosure of such authority for the final rule. a consumer. E–SIGN Act section features. Dodd-Frank Act section 1(b) Purpose 1032(c) provides that, in prescribing 104(b)(1) permits the Bureau to interpret rules pursuant to Dodd-Frank Act the E–SIGN Act through the issuance of Existing § 1006.1(b) defines terms section 1032, the Bureau ‘‘shall consider regulations. As discussed in part V, the relevant to the procedures and criteria available evidence about consumer Bureau is finalizing comments 6(c)(1)–1 for States to apply to the Bureau for an awareness, understanding of, and and –2 (providing an interpretation of exemption as provided in FDCPA responses to disclosures or the E–SIGN Act as applied to a debt section 817. Consistent with the communications about the risks, costs, collector responding to a consumer’s Bureau’s proposal to revise part 1006 to and benefits of consumer financial notification that the consumer refuses to regulate the debt collection activities of products or services.’’ 75 The Bureau is pay the debt or wants the debt collector FDCPA debt collectors, the Bureau finalizing §§ 1006.6(e) and 1006.38 to cease communication) and comments proposed to revise § 1006.1(b) to based in part on its authority under 38–1 and –2 (providing an identify the purposes of part 1006 and Dodd-Frank Act section 1032. interpretation of the E–SIGN Act as proposed to move the definitions in applied to a debt collector responding to existing § 1006.1(b) to paragraph 1(b) of D. Other Authorities Under the Dodd- appendix A of the regulation.83 The Frank Act a consumer dispute or request for original-creditor information) pursuant Bureau did not receive comment on Section 1022(b)(1) of the Dodd-Frank to E–SIGN Act section 104(b)(1). proposed § 1006.1(b) and is finalizing it Act provides that the Bureau’s Director ‘‘may prescribe rules and issue orders 79 84 FR 23274, 23286 (May 21, 2019). 80 15 U.S.C. 1692l(d), 1692o. 73 15 U.S.C. 1692(a). 76 12 U.S.C. 5512(b)(1). 81 12 U.S.C. 5481 et seq. 74 12 U.S.C. 5532(a). 77 12 U.S.C. 5481(14). 82 15 U.S.C. 7004(b)(1), (d)(1). 75 12 U.S.C. 5532(c). 78 12 U.S.C. 5512(b)(2). 83 84 FR 23274, 23286 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76742 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

as proposed pursuant to its authority A handful of consumer advocates and For the same reasons, the Bureau also under FDCPA section 814(d). a group of State Attorneys General declines to clarify whether any advocated that the Bureau expand the particular actions taken by a first-party 1(c) Coverage rule to apply to first-party debt debt collector who is not an FDCPA Section 814(d) of the FDCPA gives the collectors. debt collector would constitute an Bureau authority to prescribe rules with Nearly all of the comments regarding unfair, deceptive, or abusive practice respect to the collection of debts by debt first-party debt collector coverage were under Dodd-Frank Act section 1031. collectors, but it prohibits the Bureau from industry stakeholders such as Indeed, for the reasons discussed in the from applying those rules to motor credit unions, banks, and installment section-by-section analysis of §§ 1006.14 vehicle dealers as described in section lenders, and their trade associations. and 1006.30, the Bureau is not finalizing 1029(a) of the Dodd-Frank Act. These commenters generally expressed any provisions of the rule pursuant to Consistent with that authority, the concern that the rule would be applied its authority under Dodd-Frank Act Bureau proposed to add § 1006.1(c) to to first-party debt collectors, with some section 1031. describe the applicability of proposed such commenters expressing particular For these reasons, and because the 84 part 1006. Proposed § 1006.1(c)(1) concern that the Bureau’s reliance on its Bureau plans to finalize proposed stated that, with the exception of authority under Dodd-Frank Act section § 1006.34(c)(2)(iv) and (3)(iv) as part of proposed § 1006.108 and appendix A, 1031 for certain proposed provisions the Bureau’s disclosure-focused final proposed part 1006 would apply to debt would be used by the Bureau or others rule,89 the Bureau is adopting collectors as defined in proposed to expand the rule to apply to such § 1006.1(c)(1) as proposed and is § 1006.2(i), i.e., FDCPA debt collectors, parties. Dodd-Frank Act section 1031 reserving § 1006.1(c)(2). The Bureau is but not to motor vehicle dealers as grants the Bureau authority to write adopting § 1006.1(c) pursuant to its described in section 1029(a) of the regulations applicable to covered authority under FDCPA section 814(d) 85 Dodd-Frank Act. Proposed persons and service providers to to prescribe rules with respect to the § 1006.1(c)(2) stated that certain identify and prevent unfair, deceptive, collection of debts by debt collectors. provisions that were proposed only or abusive acts or practices in under sections 1031 or 1032 of the connection with a transaction with a Section 1006.2 Definitions 86 Dodd-Frank Act, specifically proposed consumer for, or the offering of, a Existing § 1006.2 describes how a 88 §§ 1006.14(b)(1)(ii), 1006.34(c)(2)(iv) consumer financial product or service. State may apply for an exemption from and (3)(iv), and 1006.30(b)(1)(ii), Because first-party debt collectors are the FDCPA as provided in FDCPA applied to FDCPA debt collectors only likely covered persons or service section 817.90 Consistent with the to the extent that such debt collectors providers under Dodd-Frank Act section Bureau’s proposal to revise part 1006 to were collecting a debt related to an 1031, the commenters expressed regulate the debt collection activities of extension of consumer credit or another concern that the Bureau’s reliance on FDCPA debt collectors, the Bureau consumer financial product or service, that provision effectively would expand 87 proposed to repurpose existing § 1006.2 as defined in the Dodd-Frank Act. the scope of the rule to cover them, even to implement and interpret FDCPA Proposed § 1006.1(c)(2) did not propose if they were not FDCPA debt collectors. section 803,91 which defines terms used to expand coverage to any party not The SBA also commented that the throughout the statute, and to define covered by the FDCPA. Bureau’s use of its section 1031 Dodd- additional terms that would be used in The Bureau received a number of Frank Act authority would create the regulation.92 The Bureau proposed comments on the coverage of the uncertainty and legal risk for first-party to move existing § 1006.2 to paragraph proposal. Some commenters requested debt collectors that were not in the II of appendix A of the regulation. that the Bureau exempt certain entities SBREFA process or any subsequent (e.g., servicers and attorneys) from process. The commenters asked the The Bureau received no substantive coverage. Such comments are discussed Bureau to clarify the rule’s coverage, comments on proposed § 1006.2(a) in the section-by-section analysis of either by issuing a final rule without (defining the term Act or FDCPA) or on § 1006.2(i), which is the provision that relying on Dodd-Frank Act section 1031 proposed § 1006.2(c), (g), or (l) implements FDCPA section 803(6), i.e., or by clearly stating that the final rule, (implementing the FDCPA section 803 the definition of debt collector. including any provisions that rely on definitions of Bureau, creditor, and A number of comments discussed Dodd-Frank Act section 1031, does not State, respectively). The Bureau coverage of non-FDCPA debt collectors, apply to first-party debt collectors. therefore is adopting those provisions as proposed and is not discussing them i.e., parties who collect debts but who The Bureau declines to expand the further in the section-by-section do not meet the FDCPA’s definition of rule to apply to first-party debt analysis below. The Bureau received a debt collector—a group that typically collectors who are not FDCPA debt number of comments on the other includes creditors. For ease of reference collectors, as requested by some definitions in proposed § 1006.2 and is throughout this section-by-section commenters. The proposal was intended finalizing them as discussed in the analysis, the Bureau refers to such to implement provisions of the FDCPA, section-by-section analysis of parties as first-party debt collectors. and the Bureau did not solicit feedback § 1006.2(b), (d) through (f), and (h) on whether or how such provisions through (k) below. As proposed, the 84 Id. at 23286–87. should apply to first-party debt Bureau is finalizing § 1006.2 to 85 This proposed exclusion would apply only to collectors. This rule also is not intended implement and interpret FDCPA section Regulation F. Any motor vehicle dealers who are to address whether activities performed FDCPA debt collectors would still need to comply 803, pursuant to its authority under by entities that are not subject to the with the FDCPA. FDCPA section 814(d). 86 12 U.S.C. 5531(b), 5532. FDCPA may violate other laws, 87 Proposed §§ 1006.14(b)(1)(ii) and including the prohibitions against 89 1006.30(b)(1)(ii) would have relied on the Bureau’s unfair, deceptive, or abusive practices in See the section-by-section analysis of authority under Dodd-Frank Act section 1031. § 1006.34. Dodd-Frank Act section 1031. 90 Proposed § 1006.34(c)(2)(iv) and (3)(iv) would have 15 U.S.C. 1692o. relied on the Bureau’s authority under Dodd-Frank 91 15 U.S.C. 1692a. Act section 1032. 88 12 U.S.C. 5531(b). 92 See 84 FR 23274, 23287–93 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76743

2(b) Attempt To Communicate The Bureau finds that certain communicate with a consumer in The Bureau proposed in § 1006.2(b) to messages or activity discussed by connection with the collection of any define an attempt to communicate as commenters, such as telephone calls debt at a time or place that the debt any act to initiate a communication or that do not result in a voicemail collector knows or should know is other contact with any person through message or conversation with a inconvenient to the consumer. In this any medium, including by soliciting a consumer, should be considered example, the debt collector likely would response from such person.93 Proposed attempts to communicate. These have ‘‘act[ed] to initiate a . . . § 1006.2(b) further stated that an attempt messages or activity may raise consumer contact’’—and thus attempted to to communicate includes providing a protection concerns that provisions of communicate under proposed limited-content message, as defined in the final rule regulating attempts to § 1006.2(b)—with the consumer at an § 1006.2(j). For the reasons discussed communicate are designed to address. inconvenient time in violation of below, the Bureau is finalizing For example, a debt collector might call § 1006.6(b)(1)(i). But consumers likely § 1006.2(b) with a narrower definition of a consumer to discuss the consumer’s consider a general online advertisement attempt to communicate and is adopting debt at a time that the consumer has about a debt collector’s business, which new commentary to clarify the designated as inconvenient but fail to contains no reference to the consumer’s definition’s scope. reach the consumer because the specific debt, to be less intrusive, and The Bureau received a number of consumer declines to answer the therefore less inconvenient than, for comments on proposed § 1006.2(b)’s telephone. Final § 1006.6(b)(1) prohibits example, a telephone call placed to definition of attempt to communicate. a debt collector from communicating or them by a debt collector. Consumers Industry commenters generally attempting to communicate with a also are more likely to be able to ignore requested additional clarity on, or consumer in connection with the a general advertisement. Moreover, a exclusions for, certain messages or collection of any debt at a time or place debt collector likely cannot control activity. Specifically, these commenters that the debt collector knows or should when a consumer visits a website asked about the following: (1) know is inconvenient to the consumer. displaying the debt collector’s Telephone calls that do not result in a In this example, the debt collector likely advertisement or reconcile all the voicemail message or conversation with would have ‘‘act[ed] to initiate a communications preferences of all the a consumer for various reasons (such as communication’’—and thus attempted consumers who might see the a full voicemail inbox, a voicemail to communicate—with the consumer at advertisement. To tailor the covered message system that records only a an inconvenient time in violation of activity, the Bureau is finalizing the 94 partial message from the debt collector, § 1006.6(b)(1)(i). As discussed in the definition of attempt to communicate in a telephone number that has been section-by-section analysis of final § 1006.2(b) with the phrase or other 95 disconnected, or a consumer who § 1006.6(b), a consumer who hears a contact ‘‘about a debt.’’ disconnects the call after answering); (2) telephone ringing at an inconvenient The Bureau determines that the other activity directed to groups of consumers time or place but who does not answer categories of messages or activity raised or the general public, such as marketing it may experience the natural by industry commenters are sufficiently or advertising; (3) personal consequence of harassment from the addressed by other provisions of this communications, such as ordering telephone ringing in much the same final rule and therefore do not require lunch; (4) legally required way as a consumer who answers and a revision to the definition of attempt to communications; (5) visits by a speaks to the debt collector on the communicate. As to consumers’ visits to consumer to a debt collector’s website telephone. Therefore, such activity a debt collector’s website or online or online portal; and (6) administrative remains covered under final § 1006.2(b) portal, comment 6(b)(1)–2.iii illustrates communications, such as any so that final §§ 1006.6(b) and (c) and that, notwithstanding an inconvenient communications with financial 1006.14(h) have their intended effect. time designation by a consumer, a debt institutions necessary to facilitate a At the same time, the Bureau finds collector may provide information to a consumer’s payment arrangement. that other messages or activity discussed consumer who visits or navigates the These commenters believed that, by commenters, such as general debt collector’s website or online portal. without additional clarity or exclusions marketing and advertising directed to As to legally required communications, for such situations, the definition of groups of consumers or the general § 1006.14(h)(2)(iii) provides that, if attempt to communicate would be public, or personal communications, otherwise required by applicable law, a overbroad. should not be considered attempts to debt collector may communicate or As an initial matter, the Bureau notes communicate. These messages or attempt to communicate with a person that the definition of attempt to activity may not raise the same in connection with the collection of any communicate, by itself, imposes no consumer protection concerns that debt through a medium of direct obligations on debt collectors. motivated other provisions of the final communication that the person has Other sections of the final rule, rule regulating attempts to requested the debt collector not use to including §§ 1006.6(b) and (c) and communicate. For example, a debt communicate with the person. And 1006.14(h), however, restrict or prohibit collector might place a general finally, as to administrative attempts to communicate in certain advertisement on a website, and a communications, § 1006.6(d)(2)(ii) circumstances. While commenters consumer might then view that allows debt collectors to communicate generally did not express concern about advertisement at a time that the with third parties with the prior consent the proposed definition of attempt to consumer has designated as of the consumer given directly to the communicate as it relates to those inconvenient. As noted above, final debt collector, which should permit provisions, the Bureau interprets § 1006.6(b)(1) prohibits a debt collector communications necessary to facilitate a commenters’ feedback in light of the from communicating or attempting to consumer’s payment plan. The relevant conduct those provisions were designed 94 Similar reasoning would apply to telephone 95 Similarly, a debt collector’s personal to address. calls that do not result in a voicemail message or communications would not be an act to initiate a conversation with a consumer for various reasons, contact about a debt and therefore not an attempt 93 See id. at 23287. described above. to communicate.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76744 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

section-by-section analyses provide proposed, with minor revisions for indicate that the debt collector is in the more information about the operation of clarity. debt collection business is part of the these provisions.96 The Bureau received several required content of a limited-content Finally, a group of consumer comments on proposed § 1006.2(d)’s message under the final rule, so caller definition of communicate or advocates noted that, although they ID information that discloses that communication. As with comments on generally opposed the limited-content content alone would not transform what the proposed definition of attempt to message in proposed § 1006.2(j), they is otherwise an attempt to communicate communicate discussed above, industry supported the fact that the proposal into a communication. The relevant commenters generally requested the section-by-section analyses provide would impose some limitations on Bureau provide clarity on, or exclusions attempts to communicate. However, more information about the operation of for, certain types of activity. These these provisions.99 these commenters stated that certain commenters asked about the following: protections did not apply to attempts to Finally, consumer advocates objected (1) Marketing, advertising, or other to the proposed clarification that a communicate, such as the prohibition promotional materials; (2) automated on third-party disclosures in proposed limited-content message is not a replies acknowledging a consumer’s communication. The Bureau finds that § 1006.6(d)(1) and the prohibition on message; (3) visits by a consumer to a communicating by postcard in proposed the limited-content message is debt collector’s website or online portal; appropriately considered an attempt to § 1006.22(f)(1). The Bureau has (4) legally required communications; evaluated the scope of this final rule communicate rather than a and (5) caller ID information that communication, as discussed below in and determines that each substantive discloses the debt collector’s business provision addresses a range of conduct the section-by-section analysis of final name. § 1006.2(j). appropriate to achieve the goals of that The Bureau agrees that it would be section. The section-by-section analysis useful to clarify that certain types of For the reasons discussed above, the throughout part V provides additional advertising and marketing are not Bureau is finalizing § 1006.2(d) and explanation for the final rule’s communications under § 1006.2(d). For comment 2(d)–1 largely as proposed.100 substantive provisions. example, a debt collector might develop The Bureau is also adopting new comment 2(d)–2 to clarify the status of For the reasons discussed above, the general advertising or marketing limited-content messages, as defined in Bureau is finalizing § 1006.2(b) to materials to build the debt collector’s § 1006.2(j), and marketing or advertising provide that an attempt to communicate brand, promote the debt collector’s messages that do not contain means any act to initiate a services, or establish the debt collector’s information about a specific debt. communication or other contact about a legitimacy. If such activity includes no debt with any person through any information about a specific debt, it 2(e) Consumer medium, including by soliciting a likely would not meet the definition of response from such person. a communication. FDCPA section 803(3) defines a The Bureau determines that other consumer as any natural person Comment 2(b)–1 clarifies that an act provisions in this final rule sufficiently obligated or allegedly obligated to pay to initiate a communication or other address the other categories of messages any debt.101 The Bureau proposed contact about a debt with a person is an or activity raised by industry § 1006.2(e) to implement this definition attempt to communicate regardless of commenters. Therefore, these messages and to interpret it to include a deceased whether the attempt, if successful, or activity do not require clarification in natural person who is obligated or would be a communication that conveys the definition of communication. First, allegedly obligated to pay a debt.102 information regarding a debt directly or as to automated replies, comment Proposed § 1006.2(e) also provided that, indirectly to any person, and includes 6(b)(1)–2.iv illustrates that a debt for purposes of §§ 1006.6 and two illustrative examples. collector may send an automated reply 1006.14(h), the term consumer included 2(d) Communicate or Communication generated in response to a message sent the persons described in the special by a consumer at a time that the definition of consumer in § 1006.6(a). FDCPA section 803(2) defines the consumer previously had designated as The Bureau received a number of term communication to mean the inconvenient. Second, comment 6(b)(1)– comments regarding its proposal to conveying of information regarding a 2.iii illustrates that, notwithstanding an interpret the term consumer to include debt directly or indirectly to any person inconvenient time designation by a deceased natural persons. The Bureau through any medium.97 The Bureau consumer, a debt collector may provide proposed that interpretation, in large proposed § 1006.2(d) to restate the information to a consumer who visits or part, to facilitate the delivery of statutory definition of communication, navigates the debt collector’s website or validation notices under proposed with only minor changes for clarity.98 online portal. Third, § 1006.14(h)(2)(iii) § 1006.34 when the consumer obligated, Proposed § 1006.2(d) further stated that provides that, if otherwise required by or allegedly obligated, on the debt has a debt collector does not convey applicable law, a debt collector may died. The Bureau plans to address information regarding a debt directly or communicate with a person in comments received regarding that indirectly to any person—and therefore connection with the collection of any interpretation, and to determine does not communicate with any debt through a medium of whether to finalize that interpretation, person—if the debt collector provides communication that the person has requested the debt collector not use to only a limited-content message, as 99 See the section-by-section analyses of defined in § 1006.2(j). For the reasons communicate with the person. And, §§ 1006.2(j), 1006.6(b)(1), and 1006.14(h)(2)(iii). discussed below, the Bureau is finally, § 1006.2(j) defines a type of 100 Comment 2(d)–1 explains that a finalizing § 1006.2(d) largely as message—the limited-content message— communication can occur through ‘‘any medium’’ that includes a debt collector’s business and explains that ‘‘any medium’’ includes any oral, written, electronic, or other medium. The Bureau 96 See the section-by-section analyses of name but is not a communication. did not receive any relevant feedback regarding this §§ 1006.6(b)(1) and (d)(2)(ii) and 1006.14(h)(2)(iii). Although the final rule does not comment and, therefore, is finalizing it as proposed. 97 15 U.S.C. 1692a(2). explicitly address caller ID, a debt 101 15 U.S.C. 1692a(3). 98 See 84 FR 23274, 23287–88 (May 21, 2019). collector’s business name that does not 102 See 84 FR 23274, 23288 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76745

as part of the Bureau’s disclosure- debt as any obligation or alleged several exclusions from the general focused final rule.103 obligation of a consumer to pay money definition. The Bureau’s proposed § 1006.2(e) arising out of a transaction in which the Proposed § 1006.2(i) generally cross-referenced proposed § 1006.14(h). money, property, insurance, or services restated FDCPA section 803(6)’s The Bureau proposed that the that are the subject of the transaction are definition of debt collector, with only prohibition on communication media primarily for personal, family, or minor wording and organizational under § 1006.14(h) apply to ‘‘a household purposes, whether or not the changes for clarity 110 and to specify that consumer’’ as defined under § 1006.6(a) obligation has been reduced to the term excludes private entities that but, as finalized, § 1006.14(h) applies to judgment. Proposed § 1006.2(h) also operate certain bad check enforcement ‘‘a person.’’ 104 It therefore is not would have clarified that, for purposes programs that comply with FDCPA necessary for § 1006.2(e) to include the of § 1006.2(f), the term debt means debt section 818.111 The preamble to the proposed cross-reference § 1006.14(h). as that term is used in the Dodd-Frank proposal discussed the Supreme Court’s For the reasons discussed above, the Act.108 holding in Henson v. Santander Bureau is finalizing § 1006.2(e) to Several consumer advocates and an Consumer USA Inc.112 and, consistent provide that the term consumer means industry trade group stated that the with that decision, noted that a debt any natural person obligated or proposal to define debt for purposes of buyer collecting debts that it purchased allegedly obligated to pay any debt. § 1006.2(f) as that term is used in the and owned could be considered a debt Final § 1006.2(e) further provides that, Dodd-Frank Act was confusing and collector for purposes of the rule if the for purposes of § 1006.6, the term should be removed or revised. In debt buyer either met the ‘‘principal consumer includes the persons addition, one industry trade group purpose’’ prong of the definition or described in § 1006.6(a). It also provides commenter recommended that the regularly collected or attempted to that the Bureau may further define the Bureau clarify that debt subject to the collect debts owned by others, in term by regulation to clarify its FDCPA is limited to debt incurred only addition to collecting debts that it 113 application when the consumer is by a natural person. purchased and owned. deceased. The Bureau received a number of The Bureau is finalizing § 1006.2(h) comments on the proposed definition of 2(f) Consumer Financial Product or generally as proposed. However, the debt collector. The Bureau received Service Debt Bureau is not finalizing proposed comments from both consumer advocate The Bureau proposed § 1006.2(f) to § 1006.2(h)’s cross-reference to and industry commenters discussing the define consumer financial product or § 1006.2(f) because, as discussed in the extent to which debt buyers would be service debt to mean any debt related to section-by-section analysis of considered debt collectors under any consumer financial product or § 1006.2(f), the Bureau is not finalizing Regulation F and asking the Bureau to service, as consumer financial product § 1006.2(f). This change should address provide additional explanation or or service is defined in section 1002(5) commenters’ concerns about the include the proposed preamble of the Dodd-Frank Act.105 regulation including different The Bureau is not finalizing definitions of the term debt. 110 For example, to avoid obsolete language, § 1006.2(f) as proposed. As discussed in The final rule also adds new comment proposed § 1006.2(i) uses the term ‘‘mail’’ instead the section-by-section analysis of 2(h)–1 to clarify, as requested, that debt of ‘‘the mails.’’ § 1006.1(c), the Bureau proposed certain subject to the FDCPA is limited to debt 111 15 U.S.C. 1692p. 112 137 S. Ct. 1718 (2017). In Henson, the Court provisions pursuant to its authority incurred by a natural person. The held that a company may collect defaulted debts under Dodd-Frank Act sections 1031 comment explains that § 1006.2(h) that it has purchased from another without being and 1032, and those provisions would defines debt to mean, in part, an an FDCPA debt collector. Furthermore, the Court have applied to a debt collector only if obligation of a consumer, and that decided only whether, by using its own name to collect debts that it had purchased, Santander met the debt collector was collecting a debt § 1006.2(e), in turn, defines a consumer the ‘‘regularly collects’’ prong of the introductory related to a consumer financial product as a natural person obligated or language in FDCPA section 803(6). Id. at 1721 or service, as that term is defined in allegedly obligated to pay any debt. (quoting 15 U.S.C. 1296a(6)). The Court held that section 1002(5) of the Dodd-Frank Thus, only natural persons can incur the Santander was not a debt collector within the 106 meaning of the ‘‘regularly collects’’ prong because Act. However, as discussed in more debts defined in § 1006.2(h). Santander was collecting debts that it purchased detail in the section-by-section analyses 2(i) Debt Collector and owned, not collecting debts owed to another. of §§ 1006.14, 1006.30 and 1006.34, the Id. at 1721–22. The Court expressly declined to Bureau is not finalizing those provisions FDCPA section 803(6) defines the address two other ways that a debt buyer like Santander might qualify as a debt collector under in this rulemaking. As a result, there is term debt collector for purposes of the FDCPA section 803(6): (1) By meeting the ‘‘regularly no need to define consumer financial FDCPA.109 The introductory language of collects’’ prong by regularly collecting or attempting product or service debt in this FDCPA section 803(6) generally to collect debts owned by others, in addition to provides that a debt collector is any collecting debts that it purchased and owned; or (2) rulemaking. by meeting the ‘‘principal purpose’’ prong of the person: (1) Who uses any 2(h) Debt definition. Id. at 1721 (quoting 15 U.S.C. 1296a(6)). instrumentality of interstate commerce The Court had not identified these questions as FDCPA section 803(5) defines the or the mails in any business the being presented when it granted certiorari. Id. term debt for purposes of the FDCPA.107 principal purpose of which is the 113 84 FR 23274, 23289 (May 21, 2019). In Proposed § 1006.2(h) would have addition to Henson, the Supreme Court also collection of any debts (i.e., the recently interpreted FDCPA section 803(6) to hold implemented FDCPA section 803(5) and ‘‘principal purpose’’ prong), or (2) who that a business engaged in no more than nonjudicial generally restated the statute by defining regularly collects, or attempts to collect, foreclosure proceedings is not an FDCPA debt directly or indirectly, debts owed or due collector, except for the limited purpose of FDCPA section 808(6). See Obduskey v. McCarthy & 103 See the section-by-section analysis of or asserted to be owed or due to another Holthus LLP, 139 S. Ct. 1029 (2019). And the Third § 1006.34. (i.e., the ‘‘regularly collects’’ prong). Circuit provided in Barbato v. Greystone Alliance, 104 See the section-by-section analysis of FDCPA section 803(6) also sets forth LLC, 916 F.3d 260 (3d Cir.), cert. denied, 140 S. Ct. § 1006.14(h)(1). 245 (2019), that a debt buyer whose principal 105 84 FR 23274, 23288–89 (May 21, 2019). purpose was debt collection was an FDCPA debt 106 12 U.S.C. 5531(b). 108 See 84 FR 23274, 23289 (May 21, 2019). collector even though the debt buyer outsourced its 107 12 U.S.C. 1692a(5). 109 15 U.S.C. 1692a(6). collection activities to third parties.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76746 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

discussion of the Henson decision in its 2012 final rule defining larger examples of limited-content messages, commentary to the final rule. Several participants of the consumer debt proposed comment 2(j)–3 illustrated industry commenters also requested collection market.116 ways in which a debt collector could carve outs for certain entities, including transmit a limited-content message to a 2(j) Limited-Content Message mortgage servicers and, citing Dodd- consumer (e.g., by voicemail, text Frank Act section 1027(e)(1),114 licensed FDCPA section 803(2) defines the message, or with a third party, but not attorneys engaged in litigation activities term communication to mean the by email), and proposed comment 2(j)– or the practice of law. conveying of information regarding a 4 provided that a debt collector who The Bureau is finalizing § 1006.2(i) as debt directly or indirectly to any person placed a telephone call and left only a proposed, except the final rule corrects through any medium.117 Proposed limited-content message would not an inaccurate cross-reference that had § 1006.2(d) would have implemented have, with respect to that telephone call, been included in the proposal and and interpreted that definition, violated FDCPA section 806(6)’s includes new comment 2(i)–1 to including by specifying that a debt prohibition on the placement of respond to requests to clarify the scope collector does not engage in an FDCPA telephone calls without meaningful of the term debt collector as interpreted communication if the debt collector disclosure of the caller’s identity. by the Supreme Court in Henson. provides only a limited-content The Bureau received a large number 118 Specifically, new comment 2(i)–1 message. The Bureau proposed in of comments from industry and trade provides that a person who collects or § 1006.2(j) to further interpret FDCPA association commenters, consumer attempts to collect defaulted debts that section 803(2) by defining a type of advocates, government commenters, and the person has purchased, but who does message, the ‘‘limited-content message,’’ others on the proposal to define a not collect or attempt to collect, directly that would not convey information limited-content message. After or indirectly, debts owed or due, or about a debt directly or indirectly to any considering that feedback, the Bureau is asserted to be owed or due, to another, person. Therefore, as proposed, a debt finalizing the proposed definition with and who does not have a business the collector could provide such a message several modifications as discussed principal purpose of which is the for a consumer without communicating below. collection of debts, is not a debt with any person for the purposes of the collector as defined in § 1006.2(i). FDCPA or Regulation F. Proposed Limited-Content Message Concept The Bureau declines to exclude § 1006.2(j)(1) would have required that Many commenters addressed the licensed attorneys or mortgage servicers limited-content messages include overall concept of a limited-content from the definition of debt collector. certain content, and proposed message and general aspects of the The FDCPA’s definition of debt § 1006.2(j)(2) would have permitted proposed definition.120 Federal 119 collector does not exempt licensed certain additional content. government agency staff noted the Proposed comment 2(j)–1 explained attorneys or mortgage servicers who uncertainty surrounding voicemail that any message that included content otherwise meet the definition of debt messages and supported efforts to other than the required or optional collector. Interpreting the definition to clarify debt collectors’ obligations. content specified in § 1006.2(j)(1) and exclude these or other entities would Industry commenters also supported the (2) would not be a limited-content constitute a significant interpretation of limited-content message in principle message. The proposed comment further the FDCPA on which the public did not and explained that such a provision explained that, if a message included have the opportunity to comment. These would have several benefits. Many of any other content and such other suggestions thus are outside the scope of these commenters argued that a limited- content directly or indirectly conveyed the proposal. In addition, the FDCPA content message would facilitate any information about a debt, the applies to attorneys who regularly communication between consumers and message would be a communication, as engage in debt collection activity, even debt collectors, which would benefit defined in proposed § 1006.2(d). when that activity consists of consumers by reducing the frequency of Proposed comment 2(j)–2 provided litigation,115 and the Bureau disagrees debt collection calls, lowering the that it does not have authority to engage 116 See 77 FR 65775, 65784 (Oct. 31, 2012) (citing interest and fees accrued by outstanding in rulemaking or other activities Dodd-Frank Act section 1027(e)(3), 12 U.S.C. debts, reducing the number of lawsuits covering attorneys engaged in litigation 5515(e)(3), which states that Dodd-Frank Act filed against consumers, and giving or the practice of law. Dodd-Frank Act section 1027(e)(1) ‘‘shall not be construed so as to consumers more control over when they section 1027(e)(1) does not restrict the limit the authority of the Bureau with respect to any attorney, to the extent that such attorney is listen to debt collection messages and Bureau’s rulemaking authority, and the otherwise subject to any of the enumerated respond to debt collectors. Several of Bureau considered and rejected consumer laws or the authorities transferred under these commenters stated that consumers arguments that Dodd-Frank Act section subtitle F or H’’). believe that calls from unknown 1027(e)(1) constrains the Bureau’s 117 15 U.S.C. 1692a(2). telephone numbers are scams, 118 supervisory or enforcement authority See 84 FR 23274, 23290–93 (May 21, 2019). especially if such callers fail to leave over larger participant debt collectors in 119 Proposed § 1006.2(j)(1) would have required limited-content messages to include: The voicemail messages. One industry consumer’s name, a request that the consumer reply commenter observed that consumers 114 12 U.S.C. 5515(e)(1) (establishing an exclusion to the message, the name or names of one or more expected callers to leave voicemail for the practice of law, subject to certain exceptions, natural persons whom the consumer can contact to messages, while another commenter as to the Bureau’s exercise of supervisory or reply to the debt collector, a telephone number that enforcement authority). the consumer can use to reply to the debt collector, reported that, without voicemail 115 See Heintz v. Jenkins, 514 U.S. 291, 299 (1995) and, if delivered electronically, a disclosure messages, consumers may think debt (holding that ‘‘attorneys who ‘regularly’ engage in explaining how the consumer can stop receiving collectors are unresponsive to consumer-debt-collection activity’’ are subject to messages through that medium. Proposed consumers’ efforts to communicate. the FDCPA, ‘‘even when that activity consists of § 1006.2(j)(2) would have permitted limited-content litigation.’’). In reaching this decision, the Supreme messages to include the following additional items: Court discussed the history of the FDCPA, which A salutation, the date and time of the message, a 120 To the extent that comments addressed contained an express exemption for lawyers until generic statement that the message relates to an elements of the proposed required or optional Congress repealed the exemption in its entirety in account, and suggested dates and times for the content, the Bureau discusses them in the section- 1986 ‘‘without creating a narrower, litigation- consumer to reply to the message. See the section- by-section analysis of final § 1006.2(j)(1) and (2), related exemption to fill the void.’’ Id. at 294–95. by-section analysis of § 1006.2(j)(1) and (2). respectively.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76747

Other industry commenters argued purpose, while avoiding disclosure of containing solely the information that a limited-content message would the debt to third parties. included in a limited-content message reduce unjustified lawsuits against debt As explained in the proposal, many (e.g., consumers may disregard such an collectors. One trade group commenter debt collectors state that they err on the email as spam or a security risk). stated that legal uncertainty and fear of side of caution and make repeated The Bureau received many comments liability cause many debt collectors to telephone calls instead of leaving on the communication media through avoid leaving messages entirely. messages for a consumer or sending text which debt collectors could send Another trade group commenter messages.125 Such repeated telephone limited-content messages. The majority asserted that debt collectors have tried calls may frustrate many consumers. of these comments concerned email. leaving various messages but are still Indeed, consumers often complain to Most industry commenters threatened by lawsuits. Finally, a trade the Bureau about the number of recommended allowing limited-content group commenter reported that most of collection calls they receive and, to a messages by email.129 These its members leave a message found not lesser degree, about debt collectors’ commenters made various arguments in to be a communication by one Federal reluctance to leave voicemails.126 And, support of their recommendation. Some district court in Zortman v. J.C. as noted in the proposal, the FTC and commenters asserted that email was Christensen & Assocs., Inc.121 the U.S. Government Accountability more private than other communication Many individual consumers and Office also have previously noted the media because email accounts are consumer advocates opposed any need to clarify the law regarding debt password-protected, unique to a limited-content message. Most of these collectors’ ability to leave voicemails for consumer, and generally not reassigned commenters asserted that such a consumers.127 to other consumers. One commenter message was an impermissible The Bureau determines that defining believed that the sender’s email address exemption from the FDCPA sections the content of a message that debt revealed no more information than defining and regulating collectors may leave without engaging would be disclosed by caller ID, while communications. Other commenters in an FDCPA communication will other commenters stated that debt argued that the proposal would violate decrease uncertainty and benefit both collectors could configure their email consumer privacy by permitting third debt collectors and consumers by services to omit information from the parties to hear or see limited-content reducing the need for debt collectors to sender’s email address and signature messages. And other commenters rely on repeated telephone calls without line that might result in a prohibited appeared to assert, incorrectly, that leaving messages to establish contact third-party disclosure. Other none of the proposal’s provisions with consumers. This, in turn, may commenters claimed that limited- regulating attempts to communicate or benefit consumers by increasing their content email messages would benefit communications would apply to ability to learn whether they are being consumers because consumers might limited-content messages. asked to pay the right debt, in the right prefer communicating by email, could As explained in the proposal, amount. And debt collectors will benefit research the debt collector before uncertainty about what constitutes a from the ability to leave certain responding, and could decide when and communication under FDCPA section messages without risking exposure to how to respond. One commenter stated 803(2) has led to questions about how liability for violating the FDCPA while that limited-content email messages debt collectors can leave voicemails or consumers will benefit from receiving could help compensate for what the other messages for consumers while messages that do not disclose commenter viewed as barriers to complying with certain FDCPA information about a debt. Therefore, the electronic communication under Bureau is finalizing a definition of the provisions.122 If a voicemail or other proposed § 1006.6(d)(3). Another limited-content message. At the same message is a communication with a commenter argued that, although the time, having considered commenters’ consumer, FDCPA section 807(11) proposed limited-content message concerns, the Bureau is finalizing requires that the debt collector identify would closely resemble a spam or scam certain changes to the definition, as itself as a debt collector or inform the message if delivered by email, future discussed below. consumer that the debt collector is technology might enable consumers to attempting to collect a debt and that any Permissible Communication Media verify the legitimacy of email messages, and for this reason, the Bureau should information obtained will be used for Proposed § 1006.2(j) would have 123 allow limited-content email messages. that purpose. A debt collector who enabled a debt collector to transmit a leaves a message with such disclosures, Relatedly, a State government limited-content message by voicemail, commenter asserted that email and text however, risks violating FDCPA section by text message, or orally.128 However, 805(b)’s prohibition against revealing messages were the only appropriate the proposal would not have allowed a communication media for leaving debts to third parties if the disclosures debt collector to transmit a limited- are seen or heard by a third party.124 limited-content messages because of the content message by email because relatively low risk of third-party Thus, certain messages may put a debt emails typically require additional collector who wants to avoid FDCPA disclosure, but only after a consumer information (e.g., a sender’s email had opted in to receiving electronic liability in the position of having to address) that may in some disclose the debt collector’s identity and communications from a debt collector. circumstances convey information about A few consumer advocates stated that a debt, and consumers may be unlikely 121 870 F. Supp. 2d 694, 696 (D. Minn. 2012) limited-content messages should not be (holding that debt collector did not violate FDCPA to read or respond to an email permitted to be sent by email, with one section 805(b) by leaving a voicemail message that suggesting that the Bureau incorporate stated, ‘‘We have an important message from J.C. 125 See 84 FR 23274, 23290 (May 21, 2019). this restriction into regulation text or Christensen & Associates. This is a call from a debt 126 See id. commentary. Another stated that collector. Please call 866–319–8619.’’). 127 See id. 122 See 84 FR 23274, 23290 (May 21, 2019). 128 Proposed § 1006.2(j) did not directly address limited-content email messages may be 123 15 U.S.C. 1692e(11). See also the section-by- social media; however, proposed § 1006.22(f) would section analysis of § 1006.18(e). have prohibited a debt collector from sending any 129 Several industry commenters misunderstood 124 15 U.S.C. 1692c(b). See also the section-by- message to a consumer, including a limited-content proposed § 1006.2(j) and claimed that they would section analysis of § 1006.6(d). message, by publicly viewable social media. use email to send limited-content messages.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76748 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

inappropriate because they include invasive and that debt collectors have that are relevant to the limited-content other content that might convey demonstrated a willingness to abuse message. Consumers may behave information about a debt, but argued social media platforms to harass differently in response to voicemail that the same was true of telephone consumers. The group of State messages than messages sent through numbers, which a third party could look Attorneys General asserted that limited- other communication media. For up using online search engines. content social media messages would example, because of cybersecurity Several commenters also addressed contain information about the sender concerns, consumers may be more likely limited-content text messages. Industry similar to limited-content email to delete or ignore a generic text or commenters generally supported messages. This commenter also email message from an unfamiliar allowing limited-content text messages. suggested that advertising algorithms sender than a similar voicemail Some of these commenters stated that could identify limited-content social message. As several commenters noted, many consumers prefer to use written media messages as debt collection email and text messages can contain communication media, such as text messages, and then target the consumer links or other content that could install messages, that give them time to for debt collection advertisements on malware on a consumer’s mobile compose their thoughts, and these social media or across the internet. telephone or computer. Indeed, several commenters explained that the opt-out Two industry commenters asked the Federal agencies advise consumers to notice under proposed § 1006.6(e) Bureau to clarify that debt collectors delete suspicious emails and text would effectively prevent debt may send ‘‘ringless voicemail’’ limited- messages.131 Finally, messages sent collectors from sending too many content messages, or voicemail through other communication media limited-content text messages. One messages sent directly to a consumer’s might include information beyond that industry commenter recommended also voicemail service provider without permitted by final § 1006.2(j). For allowing limited-content messages by interacting with the consumer’s mobile example, a social media platform may mobile communication applications telephone. limit debt collectors’ ability to send because they are similar to text Finally, one industry commenter messages to people outside a user’s messages. recommended allowing limited-content network, but a debt collector joining a One consumer commenter stated that, mail messages because they would be consumer’s network may create a of all the permissible limited-content less costly than validation notices. In prohibited third-party disclosure.132 message communication media, text contrast, consumer advocates believed For these reasons, final § 1006.2(j) messages have the greatest chance of the proposal would allow limited- limits the definition of limited-content being viewed only by the consumer. But content postcard messages, which, the messages to voicemail messages for a most individual consumers and commenter asserted, would violate consumer.133 consumer advocates who addressed FDCPA section 808(7)’s prohibition on Final § 1006.2(j) identifies a voicemail limited-content text messages opposed communicating with a consumer message that debt collectors may leave them. One consumer advocate argued regarding a debt by postcard. for consumers without conveying that allowing limited-content text After considering the comments information about a debt—and therefore messages would subject consumers to received, the Bureau is finalizing only communicating—under the final rule. unsolicited text message scams that limited-content voicemail messages. As Final § 1006.2(j) neither defines the could install malware on a consumer’s explained in the proposal, uncertainty exclusive means by which debt mobile telephone or lead to identity regarding debt collector’s obligations collectors can avoid conveying theft. Another consumer advocate stated and consumer’s rights under FDCPA information about a debt nor reflects a that limited-content text messages may sections 805(b) and 807(11) arose in the determination that messages sent using be more likely to lead to prohibited context of voicemail messages.130 With other communication media are always third-party disclosures than limited- this medium of communication, debt communications under the FDCPA and content voicemail messages because of collectors face the dilemma of either the final rule. In addition, as noted the text message preview that often above, final § 1006.6(d)(3) through (5) repeatedly calling a consumer and appears automatically on a smart phone provides procedures that debt collectors hanging up, or leaving a voicemail screen. And one consumer advocate and message that might convey too much one government commenter noted that, 131 Fed. Trade Comm’n, How to Recognize and information in violation of FDCPA because the proposed frequency limits Avoid Phishing Scams (May 2019), https:// section 805(b) or too little information for telephone calls would not apply to www.consumer.ftc.gov/articles/how-recognize-and- in violation of FDCPA section 807(11). avoid-phishing-scams; Fed. Deposit Ins. Corp., text messages, debt collectors could And the Bureau understands that Learning Bank—Frauds & Scams (Jan. 30, 2018), send numerous limited-content text https://www.fdic.gov/about/learn/learning/ voicemail messages have been the messages to consumers that, the scams.html; Fed. Commc’ns Comm’n, Avoid the subject of most litigation surrounding Temptation of Smishing Scams (Nov. 9, 2018), commenters explained, would increase https://www.fcc.gov/avoid-temptation-smishing- the chances of a prohibited third-party the intersection of these provisions. Accordingly, the need to define a scams. disclosure. 132 LinkedIn Messaging—Overview (July 4, 2018), A few commenters addressed limited- specific message that is not a https://www.linkedin.com/help/linkedin/answer/ content social media messages. One communication may be less pressing for 61106/linkedin-messaging-overview?lang=en (‘‘On industry commenter recommended other communication media, such as LinkedIn, you can only message your 1st-degree text messages, emails, or social media connections (and, within group pages, fellow group allowing limited-content social media members) for free.’’); Colin Hector, Debt collectors: messages in general, while another messages. You may ‘‘like’’ social media and texts, but are you industry commenter suggested allowing Apart from the absence of uncertainty complying with the law?, Fed. Trade Comm’n Bus. Blog (Mar. 28, 2016), https://www.ftc.gov/news- only direct messages sent privately to and litigation comparable to voicemail messages, other communication media events/blogs/business-blog/2016/03/debt-collectors- the consumer. A consumer advocate and you-may-social-media-texts-are-you-complying. a group of State Attorneys General, differ from voicemail messages in ways 133 The Bureau finds that voicemail messages however, opposed all limited-content include ringless voicemail messages. The Bureau 130 See 84 FR 23274, 23290 (May 21, 2019). See concludes that, from a consumer’s perspective, social media messages. The consumer also Foti v. NCO Fin. Sys., Inc., 424 F. Supp. 2d ringless voicemail messages present no greater risk advocate stated that any limited-content 643, 655–56 (S.D.N.Y. 2006); Hosseinzadeh, 387 F. of third-party disclosure than traditional voicemail social media messages would be overly Supp. 2d at 1104. messages.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76749

may follow to obtain a safe harbor from messages left with particular third consumer. Without a clear connection to civil liability for unintentional third- parties. For example, commenters, the consumer, the Bureau finds that party disclosures when communicating including many consumer advocates, third-party voicemail messages would with consumers by email or text expressed concern that a limited- benefit neither consumers nor debt message. content message left with an employer collectors. Therefore, final § 1006.2(j)’s could threaten a consumer’s continued definition of limited-content message Messages Left With Third Parties employment. And one consumer does not permit third-party messages, Proposed § 1006.2(j) would have advocate stated that domestic abusers either in live conversations or as allowed a debt collector to leave a could learn details of a consumer’s voicemail messages. limited-content message orally with a financial situation or manipulate the The Bureau recognizes, however, that third party. For example, a debt debt collector into revealing other debt collectors are often unsure whether collector could have left a limited- private information. a person with whom they are attempting content message in a live conversation Third, some commenters asserted that to communicate is the consumer. with a third party who answered the the proposal could encourage debt Indeed, the restricted content of the consumer’s home, mobile, or work collectors to intentionally contact third limited-content message contemplates telephone number. The Bureau received parties for the purpose of leaving the possibility of a third party hearing many comments on this aspect of the limited-content messages. These the information. Prohibiting all third- proposal. commenters believed that a debt party limited-content messages, no Several industry commenters collector could indirectly harass a matter how inadvertent, would supported it. One trade group consumer by leaving limited-content unreasonably limit final § 1006.2(j). commenter explained that debt messages with the consumer’s friends, Therefore, messages left without collectors often do not know whether a employers, coworkers, family, or other knowledge that the voicemail belongs to telephone number they are dialing associates. a third party, or if a debt collector is belongs to the consumer, while another Fourth, consumer advocates unsure to whom the voicemail belongs, industry commenter argued that, expressed concern about the proposal’s are limited-content messages. without the ability to leave a limited- impact on third parties. Third parties, Accordingly, the Bureau is finalizing content message with anyone who this commenter argued, may also find comment 2(j)–2 to clarify that a message answers a consumer’s telephone, debt limited-content messages harassing or knowingly left for a third party is not a collectors would have to continue annoying and, as this commenter limited-content message. calling until they reach the consumer. observed, the proposal would not have Importantly, nothing in final Another trade group commenter granted them the same rights as § 1006.2(j) places additional restrictions requested that the Bureau allow debt consumers to cease communications, on debt collectors’ abilities to collectors to ask third parties to convey designate inconvenient times and communicate or attempt to the message to the consumer. One places, or restrict communication communicate with third parties. Final industry commenter asked whether debt media. § 1006.2(j) identifies a voicemail collectors could combine limited- Finally, consumer advocates asserted message that debt collectors may leave content messages with location calls, that allowing third-party limited- for consumers without conveying asserting that this would reduce the content messages would upset the information about a debt—and therefore number of attempts to speak to a third statutory balance Congress struck communicating—under the final rule. party. between consumers’ and debt collectors’ Final § 1006.2(j) does not attempt to Many commenters, including interests. Under this commenter’s define the exclusive means by which consumer advocates, government interpretation, the FDCPA created a debt collectors can avoid conveying commenters, numerous individual narrow exception to the prohibition on information about a debt. By finalizing consumer commenters, and an academic third-party communications only for a definition of limited-content message commenter, opposed allowing debt location communications, which the that excludes third-party messages, collectors to leave limited-content proposal would violate by also therefore, the Bureau has not messages with third parties. These permitting limited-content messages. determined that messages other than commenters raised several issues with After further consideration, the limited-content messages sent to third the proposal. First, most of these Bureau is declining to finalize a parties are always communications commenters believed that, after definition of limited-content message under the FDCPA and the final rule. The receiving a limited-content message in a that allows for third-party limited- Bureau also notes that the final rule live conversation, a third party would content messages. As discussed above, authorizes certain communications with ask questions that, if answered, would final § 1006.2(j) is limited to voicemail third parties. For example, debt reveal that the consumer owes or is messages. Thus, a limited-content collectors may communicate with third alleged to owe a debt. These message left in a live conversation with parties to seek location information commenters further asserted that, even third parties would not meet the under § 1006.10 or with the prior if the debt collector avoided answering definition in § 1006.2(j). Regarding consent of the consumer given directly a third party’s questions, such voicemail messages left with third to the debt collector as provided for evasiveness would also disclose that the parties, the section-by-section analysis under § 1006.6(d)(2)(ii). call related to debt collection. Along of final § 1006.2(j)(1) requires debt with the risks created by the interactive collectors to include a business name Meaningful Disclosure of Identity nature of live conversations with third for the debt collector that does not Proposed comment 2(j)–4 provided parties, Federal government agency staff indicate that the debt collector is in the that a debt collector who placed a encouraged the Bureau to consider the debt collection business but not the telephone call and left only a limited- effect of debt collectors leaving limited- name of the consumer. Prohibiting debt content message for a consumer would content messages in multiple live collectors from including the not have, with respect to that telephone conversations with the same third party. consumer’s name greatly reduces the call, violated FDCPA section 806(6)’s Second, some of these commenters probability of any message left for a prohibition on the placement of expressed concern with limited-content third party eventually reaching the telephone calls without meaningful

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76750 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

disclosure of the caller’s identity. The content messages do not violate FDCPA Limited-Content Messages and State Bureau based this interpretation on the section 806(6) requiring meaningful Laws fact that proposed § 1006.2(j)(1) would disclosure of a debt collector’s identity A few commenters raised issues have required a limited-content message in telephone calls. Because related to State laws. A local to include the name of a natural person § 1006.2(j)(1)(i) requires that the government commenter asserted that the whom the consumer could contact as business name included in a limited- proposed limited-content message well as a telephone number that the content message not reveal that a debt would confuse debt collectors who must consumer could use to reply to the debt collector is in the debt collection also comply with State laws that lack collector and that a limited-content business, debt collectors may be similar provisions. More specifically, a message could not have contained any uncertain whether business names with trade group commenter claimed that content that was not described in abbreviations designed to satisfy debt collectors would be unable to leave proposed § 1006.2(j)(1) or (2). The § 1006.2(j)(1)(i) satisfy the meaningful limited-content messages in States interpretation in proposed comment disclosure requirement. The Bureau is requiring disclosure of the debt 2(j)–4 would have applied only when a adopting proposed comment 2(j)–4, collector’s business name in every debt collector placed a telephone call communication. One trade group and left only a limited-content message renumbered as comment 2(j)–3, to clarify that a debt collector who leaves commenter asked the Bureau to add for a consumer. optional language to proposed Two industry commenters believed a limited-content message does not violate the requirement to meaningfully § 1006.2(j)(2) to accommodate that the proposed limited-content additional State law disclosures, while message satisfied the meaningful disclose the caller’s identity with respect to that message. another trade group commenter asked disclosure requirement because it the Bureau to preempt such State laws. required debt collectors to include the Implementation Issues These commenters did not specifically name of a natural person to whom the mention items of information other than consumer could reply. But two groups A few industry commenters raised the debt collector’s name that would be of consumer advocates commented that implementation issues related to the inconsistent with the proposed limited- the proposed limited-content message proposed limited-content message. content message. failed to meaningfully disclose the These commenters cited issues that may As noted above, final § 1006.2(j) caller’s identity because the natural prevent debt collectors from leaving identifies a voicemail message that debt person would likely be unknown to the limited-content messages, such as collectors can leave for consumers consumer, might use an assumed name, disconnected telephone numbers, without conveying information about a and might not be the same person who voicemail message system limitations, debt—and therefore communicating— leaves the voicemail message. and telephone network errors. They under the final rule. Accordingly, Meaningful disclosure, these requested that the Bureau clarify that § 1006.2(j) is a definition and by itself commenters asserted, would require neither requires nor prohibits any disclosing the identity of the debt debt collectors who leave incomplete limited-content messages because of action. Circumstances might exist, such collector employing the natural person. as when State law requires additional or The Bureau determines that technological issues have still left a limited-content message. different information to be included in consumers benefit from the inclusion in a voicemail message, under which debt the limited-content message of the name Final § 1006.2(j) reflects a carefully collectors are unable to take advantage of a natural person, and a telephone tailored message designed to of the ability to leave limited-content number, to which a consumer may meaningfully disclose the caller’s messages. To the extent commenters’ reply, as well as from the prohibition on identity and include enough concerns about inconsistent State law false or misleading statements about the information to permit a consumer to concern the name of the debt collector, caller’s identity or the purpose of the decide how to respond while avoiding final § 1006.2(j)(1)(i) requires limited- call. But the Bureau agrees with conveying information regarding a debt. content messages to include a business commenters’ concerns regarding A partial limited-content message name for the debt collector that does not meaningful disclosure of the caller’s would be less likely to achieve these indicate that the debt collector is in the identity. Consumers are unlikely to purposes. Accordingly, the Bureau debt collection business.134 recognize the name of a natural person declines to define partial limited- working for the debt collector, and who Fraudulent Messages content messages as limited-content might be using an alias. And, as messages. The Bureau notes, however, A few consumer advocates and local proposed, if the natural person to whom that nothing in the final rule government commenters stated that the the consumer could reply was different automatically transforms a partial proposed limited-content message from the natural person leaving the would enable fraud. These commenters limited-content message, the only limited-content message into a communication. If such a message is argued that the limited-content message information concerning the caller’s was so generic that it could be adopted identity would have been the telephone inconsistent with the final rule despite being caused by inadvertent by scammers and used for fraudulent number included under proposed purposes. Some of these commenters technological issues, e.g., because the § 1006.2(j)(1)(iv). For this reason, and as believed that, by proposing to define the call is dropped before the debt collector discussed in the section-by-section limited-content message, the Bureau can leave its business name, and thereby analysis of § 1006.2(j)(1)(i), the final rule was contradicting the advice that requires limited-content messages to does not disclose its identity, the Federal agencies have given consumers include a business name for the debt Bureau notes that such issues can arise about how to recognize and respond to collector that does not indicate that the in the context of any telephone call (not fraudulent messages. These commenters debt collector is in the debt collection just a limited-content message). stated that Federal agencies recommend business. Not only is the debt collector’s Depending on the circumstances the that consumers ignore messages business name more useful to bona fide error defense to civil liability consumers, but it also better ensures in FDCPA section 813(c) may also 134 See the section-by-section analysis of that debt collectors who leave limited- apply. § 1006.2(j)(1)(i).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76751

containing limited information or automatically creates a prohibited third- The Bureau is finalizing comment coming from unfamiliar senders. But party disclosure. And the Bureau does 2(j)–1 largely as proposed but with these commenters claimed that the not believe that any level of familiarity revisions to the reflect the decision to Bureau would encourage consumers to would allow a third party to exclude limit the definition of limited-content respond to such messages if they took alternative plausible explanations for a message to messages left for a consumer the form of the proposed limited- limited-content message, such as a debt by voicemail and to provide an example content message. One consumer collector dialing the wrong telephone of a message that is not a limited- advocate cited the heightened number or a debt collector calling for content message. New comment 2(j)–2 cybersecurity risks of limited-content non-collection purposes. clarifies that, for the reasons discussed text or email messages, which might above, a message knowingly left for a Interaction With Other Provisions of contain links or other content that could third party is not a limited-content Regulation F install malware on a consumer’s mobile message because it is not for a consumer telephone or computer. Consumer advocates expressed and provides an example. Finally, the The Bureau has considered these risks concern that certain provisions of the Bureau is finalizing proposed comment and determines that final § 1006.2(j) proposal governing communications 2(j)–4 regarding meaningful disclosure does not heighten the risk of would not apply to the proposed of a caller’s identity as comment 2(j)–3. exploitation by scammers. First, the limited-content message, including Bureau is aware of no evidence that proposed § 1006.6(d)(1)’s prohibitions 2(j)(1) Required Content voicemail messages currently left by regarding communications with third Proposed § 1006.2(j)(1) would have debt collectors, some of which closely parties, proposed § 1006.10’s provisions required limited-content messages to resemble final § 1006.2(j)’s limited- regarding location communications, include the following content to ensure content message, have increased bad proposed § 1006.18(e)’s disclosures, that they facilitate contact between debt actors’ abilities to harm consumers. proposed § 1006.22(f)(1)’s prohibition collectors and consumers: The Second, the final rule limits the on communicating with consumers by consumer’s name (proposed definition of limited-content message to postcard, and proposed § 1006.34’s § 1006.2(j)(1)(i)); a request that the voicemail messages, which should requirements regarding sending consumer reply to the message lessen commenters’ concerns about validation notices to consumers. The (proposed § 1006.2(j)(1)(ii)); the name or limited-content email and text Bureau has evaluated the scope of the names of one or more natural persons messages. Third, final § 1006.2(j)(1)(i) final rule and determines that each whom the consumer can contact to requires limited-content messages to substantive provision addresses a range reply to the debt collector (proposed include a business name for the debt of conduct appropriate to achieve the § 1006.2(j)(1)(iii)); a telephone number collector that does not indicate that the goals of that section. The section-by- that the consumer can use to reply to debt collector is in the debt collection section analysis throughout part V the debt collector (proposed business. Improved information about provides additional explanation for each § 1006.2(j)(1)(iv)); and, if delivered the identity of the caller decreases any of the final rule’s substantive electronically, a disclosure explaining similarity between the limited-content provisions. how the consumer can stop receiving messages through that medium message adopted under this final rule Interaction With Other Federal Law and the types of fraudulent messages (proposed § 1006.2(j)(1)(iv)). Proposed about which Federal agencies have One trade group commenter stated comment 2(j)(1)(iv)–1 explained that a warned consumers. that the proposed limited-content voicemail or a text message that spells message was potentially inconsistent out, rather than enumerates Familiarity With Limited-Content with the Federal Communications numerically, a vanity telephone number Messages Commission’s (FCC) rules implementing is not a limited-content message. Several consumer advocates and the Telephone Consumer Protection Act Spelling out a vanity telephone number government commenters argued that the of 1991 (TCPA) 135 and the Cellular could, in some circumstances, convey public would eventually become Telecommunications Industry information about a debt or otherwise familiar with the limited-content Association (CTIA)’s industry standards. disclose that the message is from a debt message and associate it with debt Specifically, this commenter argued that collector. collection, suggesting the limited- limited-content text messages sent For the reasons described below, the content message itself would create a without a consumer’s prior consent may Bureau is finalizing § 1006.2(j)(1) largely prohibited third-party disclosure even if violate the TCPA or industry standards. as proposed but with modifications to its content alone did not convey As explained above, final § 1006.2(j) is reflect the revised scope of the information regarding a debt. limited to voicemail messages. The definition, as discussed in the section- As an initial matter, the Bureau notes Bureau declines to address limited- by-section analysis of § 1006.2(j), and to that limited-content messages may vary content text messages. require a business name for the debt slightly in their content because debt For the reasons discussed above and collector that does not indicate that the collectors may choose to include pursuant to its authority to interpret debt collector is in the debt collection different items of optional information FDCPA section 803(2), the Bureau is business, in lieu of the consumer’s name described in final § 1006.2(j)(2). The finalizing the proposed definition of in § 1006.2(j)(1)(i). Bureau understands that, despite the limited-content message with revisions. Many industry commenters requested legal uncertainty in the voicemail Specifically, final § 1006.2(j) provides that the Bureau require or permit context, some debt collectors have been that a limited-content message is a additional information in the limited- leaving messages that some courts have voicemail message for a consumer that content message. Without additional held are not communications. The includes all of the content described in content, these commenters asserted, Bureau is not aware of any evidence that § 1006.2(j)(1), that may include any of consumers would view the limited- these messages, some of which closely the content described in § 1006.2(j)(2), content message as uninformative, resemble final § 1006.2(j)’s limited- and that includes no other content. confusing, or suspicious. Most of these content message, are so familiar to commenters asked the Bureau to allow consumers that the message itself 135 Public Law 102–243, 105 Stat. 2394 (1991). debt collectors to disclose their business

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76752 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

name, especially if the name did not Consumers may also be more likely to the risk of third-party disclosure.140 reveal that the debt collector was in the reply to a limited-content message if Accordingly, final § 1006.2(j)(1) does debt collection business. A few they believe the message is legitimate. not include the consumer’s name in the commenters pointed to FDCPA section Finally, requiring limited-content limited-content message. 808(8), which allows debt collectors to messages to include the debt collector’s Based on the range of industry include their business name on an business name ensures meaningful commenters who supported including a envelope if the name does not indicate disclosure of the caller’s identity business name for the debt collector that that the debt collector is in the debt consistent with FDCPA section 806(6), does not indicate that the debt collector collection business. Three commenters as discussed in the section-by-section is in the debt collection business, the cited the Bureau’s Debt Collection analysis of § 1006.2(j), above. Bureau expects that many debt Consumer Survey, which found that collectors will be able to disclose a The Bureau is not finalizing the almost 90 percent of consumers business name (e.g., a doing business as consumer’s name as a required or reported that they preferred voicemail (d/b/a) name) without revealing that messages to include the creditor or debt optional element of the limited-content they are in the debt collection business. collector’s name. Along with the debt message as proposed. The Bureau finds Moreover, industry has long been collector’s name, industry commenters that a message containing a business subject to FDCPA section 808(8), which asked the Bureau to include various name for the debt collector that does not allows debt collectors to include their items of information, including: the indicate that the debt collector is in the business name on an envelope only if creditor’s name; the debt collector’s debt collection business, but not the the name does not indicate that the debt website address; the type of account, consumer’s name avoids conveying collector is in the debt collection such as a student loan or branded credit information regarding a debt under business. But circumstances might exist card; the debt collector’s email address FDCPA section 803(2). A third party that would prevent debt collectors from or other electronic contact information; overhearing such a message would be taking advantage of the limited-content an invitation to enroll in a debt unable, based on the message’s content message definition. For example, a debt collector’s text messaging service; and alone, to rule out several alternative collector’s business name might reveal four consecutive digits from an account explanations for the message other than that the debt collector is in the debt number. that the consumer owes a debt. For collection business. In such After considering the comments, the example, the third party may believe circumstances, a message that includes Bureau is finalizing § 1006.2(j)(1) to that a business other than a debt the debt collector’s business name require a business name for the debt collector has left the message, because would not be a limited-content message, collector that does not indicate that the final § 1006.2(j)(1) permits only business as defined in final § 1006.2(j). But, as debt collector is in the debt collection names that do not indicate that a debt explained above, final § 1006.2(j) business, in lieu of the consumer’s name collector is in the debt collection identifies a voicemail message that debt in § 1006.2(j)(1)(i). As commenters who business. Even if a third party believes collectors may leave for consumers referred to the Bureau’s Debt Collection that a debt collector has left the without conveying information about a Consumer Survey noted, most message, the debt collector might have debt—and therefore communicating— consumers prefer that voicemail dialed the wrong telephone number; the under the final rule. Final § 1006.2(j) messages disclose the caller’s debt collector might have dialed the neither defines the exclusive means by institutional identity.136 Including the intended telephone number but have which debt collectors can avoid debt collector’s business name will inaccurate information about to whom conveying information about a debt nor enable consumers to verify the debt the telephone number is assigned; the collector’s legitimacy and make a better- debt collector might be calling to seek 140 Although courts disagree about when a informed decision about what action, if location information from the message conveys information about a debt, the any, to take in response to the limited- consumer; 138 or the debt collector might Bureau’s analysis is consistent with several cases content voicemail message. Consistent be calling for a non-debt-collection considering messages similar to final § 1006.2(j). 139 See Zortman, 870 F. Supp. 2d at 701 (finding that with the advice of several Federal purpose. Including the consumer’s the following message was not a communication: agencies, consumers who are suspicious name would narrow the range of ‘‘We have an important message from J.C. of a limited-content message can use the alternative explanations and increase Christensen & Associates. This is a call from a debt collector. Please call 866–319–8619.’’); Miller v. debt collector’s business name to MediCredit, Inc., No. 3:18–CV–00603 (DJN), 2019 research the company and reply using email.’’); Fed. Commc’ns Comm’n, Avoid the WL 6709388, at *7–8 (E.D. Va. Dec. 9, 2019) contact information the consumer finds Temptation of Smishing Scams (Nov. 9, 2018), (finding that a message similar to the Zortman https://www.fcc.gov/avoid-temptation-smishing- voicemail was not a communication); Jackson v. rather than relying on the telephone scams (‘‘If you get a text purportedly from a 137 Eltman, Eltman & Cooper, P.C., 128 F. Supp. 3d number included in the message. company or government agency, check your bill for 980, 985 (E.D. Mich. 2015) (finding a fax message contact information or search the company or was a communication because it ‘‘identifies [the 136 CFPB Debt Collection Consumer Survey, supra agency’s official website. Call or email them consumer] by name and states its purpose as note 16, at 38. separately to confirm whether you received a ‘‘COLLECTION’’); Gearman v. Heldenbrand, No. 137 See, e.g., Bureau of Consumer Fin. Prot., How legitimate text. A simple web search can thwart a 15–cv–2039 (DSD/FLN), 2015 WL 5255335, at *1 to tell the difference between a legitimate debt scammer.’’). (D. Minn. Sept. 9, 2015) (‘‘[M]erely identifying collector and scammers (Nov. 20, 2019), https:// 138 Like FDCPA section 804, final § 1006.10(b)(1) oneself as a debt collector does not convey www.consumerfinance.gov/about-us/blog/how-tell- permits a debt collector seeking location information regarding a debt.’’); Zweigenhaft v. difference-between-legitimate-debt-collector-and- information to identify the debt collector’s Receivables Performance Mgmt., LLC, No. 14 CV scammers/ (‘‘If you’re uncomfortable providing any employer ‘‘only if expressly requested,’’ but even a 01074 RJD JMA, 2014 WL 6085912, at *1 (E.D.N.Y. information, you can request the caller’s name, third party who overhears the limited-content Nov. 13, 2014) (finding that a message similar to the company name, street address, and a callback message and is generally aware that debt collectors Zortman voicemail was not a communication); number. You can use this information to verify that make location communications may be unaware of Hanson v. Green Tree Servicing, LLC, No. 12–cv– they are not a scammer before providing any the precise form and content provisions governing 2933 (DSD/SER), 2013 WL 4504290, at *2 (D. Minn. personal information.’’); Fed. Trade Comm’n, How those communications. Aug. 23, 2013) (similar). Indeed, § 1006.2(j) is more to Recognize and Avoid Phishing Scams (May 139 For example, in a case where the plaintiff protective of consumer privacy than the messages 2019), https://www.consumer.ftc.gov/articles/how- worked for a debt collector, a court noted that ‘‘[i]t at issue in the Zortman line of cases because it recognize-and-avoid-phishing-scams#suspect would not be unreasonable that a call from a debt includes the condition that the debt collector’s (‘‘[C]ontact the company using a phone number or collector related to her employment.’’ Zortman, 870 business name not reveal that the debt collector is website you know is real. Not the information in the F. Supp. 2d at 705. in the debt collection business.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76753

reflects a determination that messages Similarly, the Bureau is not finalizing finalizing § 1006.2(j)(2) largely as that include a business name that proposed comment 2(j)(1)(iv)–1, which proposed, but with revisions to prohibit reveals that a debt collector is in the would have explained that a voicemail inclusion of a generic statement that the debt collection business are always or a text message that spells out, rather message relates to an account, and to communications under the FDCPA and than enumerates numerically, a vanity permit a statement that a consumer who the final rule. telephone number is not a limited- replies to the message can speak to any The Bureau declines to require other content message. This comment was of the debt collector’s representatives or information in the content of the intended to address concerns that associates. limited-content message as requested by spelling out a vanity telephone number Numerous commenters addressed commenters. Some information might convey information about a debt proposed § 1006.2(j)(2)(iii)’s optional commenters requested be included, or otherwise disclose the name of the generic statement that the message such as invitations to enroll in a debt debt collector. Because § 1006.2(j)(1)(i) relates to an account. Only a few collector’s text messaging service, is less requires disclosing a business name for commenters supported this provision. A relevant given that final § 1006.2(j) is the debt collector that does not indicate trade group commenter stated that it limited to voicemail messages. In that the debt collector is in the debt had considered alternative language but addition, the Bureau finds that debt collection business, this comment is less found it potentially confusing, while an collectors can better convey information relevant to the limited-content message individual believed the word ‘‘account’’ regarding electronic communication as finalized. The Bureau notes, however, was too general to result in any options to consumers by emailing or that a vanity telephone number that prohibited third-party disclosures. texting them consistent with the safe reveals that the debt collector is in the In contrast, most of the commenters harbor procedures for electronic debt collection business would not who addressed the issue opposed the communications in final § 1006.6(d)(3) comply with final § 1006.2(j)(1)(i). As optional reference to an account. through (5). Other requested explained above, the Bureau finds that Industry commenters generally believed information, such as descriptions of, or a message containing the debt that the word account was too vague to be useful to consumers. These digits from, an account, or the fact that collector’s business name but not the commenters argued that such a the account was held with a particular consumer’s name avoids conveying reference would be unlikely to prompt creditor, would convey information information regarding a debt under consumers to reply. One trade group regarding a debt, as discussed in the FDCPA section 803(2) and under commenter asserted that fraudulent section-by-section analysis of § 1006.2(d). voicemail messages often contain § 1006.2(j)(2), below. For the reasons discussed above, § 1006.2(j)(1) requires that limited- references to a generic account. Another A trade group commenter asked content messages include the following industry commenter believed that the whether caller ID information that content: A business name for the debt word ‘‘account’’ might reveal more discloses the debt collector’s business collector that does not indicate that the information than the name of the name would prevent a debt collector debt collector is in the debt collection creditor or debt collector. from leaving a limited-content message. business, a request that the consumer Several consumer advocates and As explained immediately above, the reply to the message, the name or names government commenters also opposed final rule requires limited-content of one or more natural persons whom allowing debt collectors to refer to an messages to include a business name for the consumer can contact to reply to the account. These commenters argued that the debt collector that does not indicate debt collector, and a telephone number the word account would itself reveal the that the debt collector is in the debt or numbers that the consumer can use existence of a debt or otherwise invade collection business. Accordingly, caller to reply to the debt collector. Comment a consumer’s privacy. Some of these ID information that discloses no more 2(j)(1)–1 provides an example of a commenters argued that the word than the business name or other content limited-content message containing only account inherently discloses the required or permitted by § 1006.2(j) is required content. existence of a debt. An academic consistent with the definition of a commenter asserted that most non-debt limited-content message. The Bureau 2(j)(2) Optional Content collection messages include more acknowledges that caller ID information Proposed § 1006.2(j)(2) would have information about the nature of the may disclose more information than permitted a debt collector to include in consumer’s account. One group of permitted by § 1006.2(j). In these a limited-content message the following consumer advocates cited cases holding circumstances, such voicemail messages optional information: A salutation that certain messages were not would not meet the definition of (proposed § 1006.2(j)(2)(i)), the date and communications under the FDCPA and limited-content message. The Bureau time of the message (proposed argued that the absence of a reference to does not determine, however, that § 1006.2(j)(2)(ii)), a generic statement an account was important to the holding messages with different content, such as that the message relates to an account in those cases. a business name displayed by caller ID (proposed § 1006.2(j)(2)(iii)), and The Bureau does not believe that the that reveals that a debt collector is in the suggested dates and times for the word account necessarily discloses the debt collection business, are always consumer to reply to the message existence of a debt because consumers communications under the FDCPA and (proposed § 1006.2(j)(2)(iv)). As may receive messages about their the final rule. discussed in the proposal, the Bureau accounts with companies other than The Bureau is not finalizing proposed believed that this content might prompt debt collectors. In the context of the § 1006.2(j)(1)(v), which would have a consumer to reply but, unlike the final rule’s limited-content message, required the limited-content message to content described in proposed however, referring to an account would include, if delivered electronically, a § 1006.2(j)(1), might not be necessary to increase the risk of a prohibited third- disclosure explaining how the consumer enable the consumer to reply to the party disclosure. As discussed above in can stop receiving messages through message or to prevent harassment the section-by-section analysis that medium. Because final § 1006.2(j) is through an overly generic or finalizing § 1006.2(j)(1)(i)’s requirement limited to voicemail messages, this uninformative message. For the reasons to include the debt collector’s business element is no longer applicable. described below, the Bureau is name, a third party overhearing a

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76754 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

limited-content message on a approach, some commenters asserted, stock companies, as well as consumer’s voicemail system would be would allow debt collectors to maintain individuals.’’ 143 unable to determine whether a debt consistency with other Federal rules Three industry associations stated collector or another business left the that provide more flexibility in that the proposed definition was overly message, or assuming a debt collector identifying the individuals with whom expansive and would impermissibly left the message, whether the debt a consumer might communicate. expand standing to bring an FDCPA collector left it because the consumer The Bureau finds that the name of a claim to artificial entities even though owes a debt or for another reason. But natural person to whom a consumer the purpose of the FDCPA is to protect including the word account narrows the may reply is an important element of consumers. The commenters requested range of possible alternative the limited-content message.142 Such that the proposed definition either be explanations for the message. For information helps efficiently direct the deleted or limited to natural persons. example, a message to a consumer consumer’s reply call to a person who The Bureau is finalizing the definition referring to ‘‘your account’’ is unlikely is able to discuss the consumer’s debt. of person as proposed. Including this to be a message seeking location But the Bureau agrees with commenters definition will clarify who is subject to information from the recipient. This that some flexibility regarding this provisions of the regulation that use the raises the probability of a third party information would benefit consumers term person. The Bureau declines to inferring that the message relates to a and debt collectors. If someone other delete the definition of person or to consumer’s debt.141 than the natural person identified in the narrow it to include only natural Additionally, the proposal may have limited-content message answered their persons because the plain language of overestimated the benefits of an reply call, consumers likely would not the FDCPA illustrates that Congress did optional generic statement that the be confused or frustrated, and large debt not intend to limit the term person, as message relates to an account. As collectors could more easily employ the used in the FDCPA, to natural persons. commenters noted, debt collectors could limited-content message. Certain For example, the definition of debt not include information about the references to a debt collector’s groups or collector in the FDCPA uses the phrase account, such as the type of account or offices, such as the ‘‘credit card ‘‘any person’’ repeatedly, and there is no the company with whom the account is receivables group,’’ however, might doubt that Congress intended to include held. The presence of such information heighten the risk of a prohibited third- non-natural persons in the definition of would risk conveying information about party disclosure. A general reference to debt collector. Where the statute was a debt, but its absence leaves the other ‘‘representatives or associates,’’ on intended to be limited to natural consumer without important context the other hand, would minimize such persons, Congress achieved that intent that may prompt consumers to reply, if risk while achieving the purposes by using the term consumer. For they so choose. As explained in the identified by commenters. Accordingly, example, FDCPA section 803(5) defines section-by-section analysis of final § 1006.2(j)(2)(iv) defines the the term debt to include obligations of § 1006.2(j)(1)(i), the business name of limited-content message to include an a consumer, and FDCPA section 803(3) the debt collector is more beneficial to optional statement that, if the consumer limits the term consumer to a natural consumers. In light of the limited utility replies, the consumer may speak to any person. As a result, the Bureau of a reference to an account, the Bureau of the company’s representatives or concludes that the proposed definition finds that such content would create an associates. of person would not expand the scope unjustified risk of prohibited third-party For the reasons discussed above, final of the FDCPA beyond the scope that disclosure. Accordingly, final § 1006.2(j) § 1006.2(j)(2) permits a limited-content Congress intended. However, the no longer provides that a limited- message to include the following Bureau is clarifying in the definition of content message may include a generic content: A salutation, the date and time debt at § 1006.2(h) that debt subject to reference to an account. of the message, suggested dates and the FDCPA is limited to debt incurred Several industry commenters asked times for the consumer to reply to the by a natural person. See the section-by- the Bureau to modify proposed message, and a statement that, if the section analysis of § 1006.2(h) for § 1006.2(j)(1)(iii)’s requirement that a consumer replies, the consumer may additional discussion. limited-content message include the speak to any of the company’s Subpart B—Rules for FDCPA Debt name or names of one or more natural representatives or associates. Comment Collectors 144 persons whom the consumer can 2(j)(2)–1 clarifies that a message that contact to reply to the debt collector. includes a more detailed description of Section 1006.6 Communications in These commenters stated that large debt a company’s representative or associate Connection With Debt Collection collectors would be unable to predict group is not a limited-content message FDCPA section 805 generally limits which natural person might be available and provides an illustrative example. how debt collectors may communicate to answer a consumer’s reply. These Comment 2(j)(2)–2 provides an example with consumers and third parties when commenters offered several solutions, of a limited-content message that collecting debts.145 The Bureau including permitting limited-content includes all of the information required proposed § 1006.6 to implement and messages to refer generally to ‘‘agents,’’ under § 1006.2(j)(1) and all of the interpret FDCPA section 805, and to ‘‘associates,’’ ‘‘representatives,’’ or content permitted under § 1006.2(j)(2). particular groups or organizations 143 2(k) Person See 84 FR 23274, 23293 (May 21, 2019). 1 within the debt collector. Such an U.S.C. 1 states that ‘‘in determining the meaning of The FDCPA frequently uses, but does any Act of Congress, unless the context indicates 141 Two commenters stated that the Bureau had not define, the term person. The Bureau otherwise,’’ the term person includes ‘‘corporations, companies, associations, firms, partnerships, not conducted consumer testing regarding what proposed § 1006.2(k) to define person, information does or does not reveal the existence societies, and joint stock companies, as well as of a debt. Although the Bureau recognizes the value consistent with the definition of that individuals.’’ of consumer testing, there are other legitimate term in 1 U.S.C. 1, to include 144 As proposed, the final rule moves existing grounds on which to base a provision of a final rule. ‘‘corporations, companies, associations, §§ 1006.3 through 1006.8 regarding applications for Here, the Bureau is relying on its interpretation of State exemptions from the FDCPA to appendix A FDCPA section 803(2)’s definition of firms, partnerships, societies, and joint of the regulation. See the section-by-section communication, after considering comments analysis of § 1006.108 and appendix A. received and existing case law. 142 See 84 FR 23274, 23292 (May 21, 2019). 145 15 U.S.C. 1692c.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76755

interpret FDCPA sections 806 and 808 reported receiving such requests from including by choosing when, where, to provide certain additional protections consumers. But industry commenters and how much time to spend regarding debt collection also generally stated that they refrain responding to a debt collector’s email or communications. As discussed in more from communicating electronically text message. For debt collectors, these detail below, § 1006.6, among other because they fear liability under FDCPA technologies are a more effective and things, specifies and clarifies a debt section 805(b) for an unintentional efficient means of communicating with collector’s obligation to abide by a third-party disclosure, such as if they some consumers. The Bureau declines consumer’s preferences when send an email or a text message to an to categorically prohibit the use of these communicating in connection with the email address or telephone number that potentially beneficial communication collection of any debt. Section 1006.6 does not belong to the consumer. media where Congress has not amended also interprets FDCPA sections 805, 806, A few individual consumers the FDCPA to prohibit their use. and 808 with respect to newer expressed a general interest in As to commenters’ specific concerns communication technologies. And to communicating with debt collectors regarding privacy and the risks of third- protect consumer privacy, § 1006.6 electronically. But most individual party disclosure, § 1006.6(d)(3) through identifies procedures reasonably consumer and consumer advocate (5) sets forth procedures that a debt adapted to avoid a violation of FDCPA commenters, as well as consumer collector may follow to obtain a safe section 805(b)’s prohibition on third- attorney, academic, and government harbor from civil liability for a third- party disclosures when communicating commenters, raised concerns about the party disclosure when sending an email by email or text message. Pursuant to its Bureau’s proposals and either opposed or a text message to a consumer. The authority under FDCPA section 814(d) electronic communications in debt Bureau expects that most debt collectors to write rules with respect to the collection, or supported them only if the will use the procedures, which are collection of debts by debt collectors, consumer had first explicitly consented, designed to protect consumers against the Bureau is finalizing § 1006.6 with or opted in, to receiving them. These the risk of third-party disclosure, when certain changes to address feedback and commenters argued that an opt-in communicating by email and text other consumer protection concerns. approach would enable consumers, message. As to commenters’ other Electronic Communications in Debt before agreeing to electronic concerns, the Bureau notes that, as Collection communications, to: (1) Weigh any risks discussed in the section-by-section due to irregular internet or cellphone analyses of §§ 1006.6(b) and (e) and As proposed, § 1006.6 would have access; (2) confirm the addresses and 1006.14(h), the Bureau is finalizing clarified how various provisions in telephone numbers to which electronic provisions that will require debt FDCPA section 805, such as the communications may be directed, collectors to provide consumers with a prohibitions against communications at ensuring that, particularly for reasonable and simple method of opting inconvenient times and places and the consumers who regularly change out of electronic communications and prohibition against communicating telephone numbers or email addresses, that will permit consumers to control about a debt with a third party, would communications are sent to the the time, place, and media through have applied to electronic consumer rather than to a third party; which debt collectors may communications such as emails and text (3) weigh the financial cost, if any, of communicate. In addition, as discussed messages. The proposal would not have electronic communications; (4) in the section-by-section analysis of prohibited any particular methods of familiarize themselves with the sender § 1006.42, the Bureau is finalizing a electronic communication or and weigh any security risks, helping to general standard for electronic delivery established an opt-in framework for ensure that consumers actually open of required disclosures. The Bureau such communications. The Bureau emails and minimizing the chance that determines that the final rule’s overall received a large number of comments in such emails are blocked by spam filters approach to electronic communications response to the particular proposed and other screening devices; 146 and (5) addresses commenters’ concerns. interventions, and the Bureau addresses weigh any privacy-related risks, Consumer and consumer advocate those comments in the section-by- including the risk that emails and text commenters, some members of section analysis below. messages could be viewed by a In addition, the Bureau received many Congress, a group of State Attorneys consumer’s telephone or email provider, comments addressing the risks and General, and other State and local benefits of electronic communications could appear on a publicly visible government commenters also expressed in debt collection. In general, industry computer or telephone screen, or could specific concern about the costs of text be coming from a phony, rather than messaging.148 For consumers who lack commenters supported the use of 147 electronic communications, noting that, legitimate, debt collector. unlimited text messaging plans, sending The Bureau determines that electronic compared to non-electronic and receiving text messages may not be communications can offer benefits to communications such as mail and free. Some consumers with limited text consumers and debt collectors. telephone calls, electronic messaging plans may pay for each text Technologies such as email and text communications are faster and more message; others may pay for each text messaging allow consumers to exert cost effective; enable debt collectors to message above a cap. Consumer greater control over the timing, reach consumers who do not answer the advocate commenters noted that many frequency, and duration of telephone or who change addresses of their clients maintain limited text communications with debt collectors, frequently; provide consumers with messaging plans. The prevalence of more privacy and greater control over such plans among the general public, or 146 As the Bureau noted in the proposal, several the time and place of engagement; and among consumers with debts in Federal agencies advise consumers not to open collection, is not clear, although some create a digital record of a consumer’s emails from senders they do not recognize. See 84 interactions with a debt collector. Many FR 23274, 23363 n.578 (May 21, 2019). information suggests that most industry commenters asserted that, 147 Many commenters raised specific concerns about the frequency with which consumers might 148 Although a few commenters noted that, for because of these benefits, consumers receive emails and text messages from debt consumers with limited data plans, sending and wish to communicate electronically, collectors. Those comments are addressed in the receiving emails may not be free either, most and several industry commenters section-by-section analysis of § 1006.14(a). commenters focused on the costs of text messaging.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76756 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

consumers in general have unlimited reasons, and in light of the other 805 to include the consumer’s spouse text messaging plans.149 provisions in the final rule addressing and (if the consumer is a minor) Consumer and consumer advocate debt collectors’ use of text messages, the parent.154 Proposed § 1006.6(a)(1) and commenters, some members of Bureau declines to finalize a (2) would have implemented these Congress, a group of State Attorneys requirement that debt collectors use aspects of the definition.155 In addition, General, and other State and local FTEU technology. the Bureau proposed comments 6(a)(1)– government commenters urged the 6(a) Definition 1 and 6(a)(2)–1 to clarify that deceased Bureau to address the costs associated consumers’ surviving spouses and with text messaging by requiring debt FDCPA section 805(d) provides that, deceased minor consumers’ parents, collectors to obtain affirmative consent for purposes of section 805, the term respectively, are consumers for before sending text messages. These consumer includes certain individuals purposes of § 1006.6. This interpretation commenters argued that an opt-in other than the person obligated or was consistent with the Bureau’s system would enable consumers to allegedly obligated to pay the debt. proposal to interpret the general weigh the costs of text messages before These individuals include the definition of consumer in § 1006.2(e) to agreeing to receive them from a debt consumer’s spouse, parent (if the include deceased persons.156 consumer is a minor), guardian, collector. As discussed in detail below, A group of consumer advocates executor, or administrator.151 § 1006.6(d)(5) specifies procedures that, objected to proposed comments 6(a)(1)– Accordingly, the protections in FDCPA when followed, provide a debt collector 1 and 6(a)(2)–1. These commenters section 805 apply both to these with a safe harbor from civil liability for argued that the language of the FDCPA individuals and to the person obligated an unintentional third-party disclosure forecloses the proposed interpretation or allegedly obligated to pay the debt. when sending a text message to a because it includes present-tense Also, debt collectors may communicate telephone number. These procedures language in describing the consumer’s with these individuals in connection effectively create an opt-in system for parent and avoids the term surviving the use of text messages, and, as noted, with the collection of any debt without violating the FDCPA’s prohibition on spouse, which Congress used elsewhere the Bureau expects that most debt 152 in the U.S. Code. These commenters collectors will use them. third-party disclosures. The Bureau proposed § 1006.6(a) to further argued that no legitimate reason Several consumer advocate implement and interpret FDCPA section existed for a debt collector to commenters, some members of 805(d) and to define consumer for communicate with consumers’ Congress, a State Attorney General, and purposes of § 1006.6. Proposed surviving spouses or parents of other government commenters § 1006.6(a) generally mirrored FDCPA deceased minor consumers because the suggested that the Bureau address the section 805(d), except that proposed FDCPA permits (as would a final rule) costs associated with text messaging by § 1006.6(a)(5) would have interpreted location communications and requiring debt collectors to use free-to- the term to include a confirmed communications with executors or end-user (FTEU) text messaging or successor in interest, and proposed administrators of a deceased consumer’s otherwise require debt collectors to pay comments 6(a)(1)–1, 6(a)(2)–1, and estate. Finally, the commenters urged for text messages. The Bureau believes 6(a)(4)–1 would have clarified how the the Bureau to expressly prohibit debt that the limitations in final term applied when the consumer collectors from communicating with § 1006.6(d)(5)—which, as noted, obligated or allegedly obligated on the anyone in the decedent debt context effectively create an opt-in system for debt had died. For the reasons discussed unless the debt collector had text messages—offer a more practical below, the Bureau is finalizing determined that the person owed a debt solution than requiring debt collectors § 1006.6(a) largely as proposed, but is or was the executor or administrator of to use FTEU text messaging. Consumers making minor changes for clarity.153 a deceased consumer’s estate. who do not wish to incur the cost of text On several issues related to decedent 6(a)(1) and (2) messages are unlikely to opt into a debt debt, the Bureau is finalizing an collector’s use of text messages, and, as FDCPA section 805(d) defines the approach consistent with the FTC’s discussed in the section-by-section term consumer for purposes of section Policy Statement on Decedent Debt.157 analysis of § 1006.6(e), a consumer who The FTC stated that it would decline to no longer wishes to receive text iVision Mobile, Free to End User (FTEU), http:// take enforcement actions against debt messages from a debt collector must be www.ivisionmobile.com/text-messaging-software/ collectors who communicated with ‘‘the provided with a reasonable and simple free-to-end-user-fteu.asp (last visited Sept. 23, 2020); Mobile Mktg. Ass’n, U.S. Consumer Best decedent’s spouse [or] parent (if the way to opt out of such communications. Practices for Messaging: Version 7.0, at 43 (Oct. 16, decedent was a minor at the time of Further, as the Bureau noted in the 2012), https://www.mmaglobal.com/files/ death).’’ 158 The FTC rejected the same proposal, because FTEU text messaging bestpractices.pdf (describing FTEU ‘‘Cross Carrier Guidelines’’ as providing that ‘‘[c]ontent providers legal arguments that the commenter may only be supported by certain must obtain opt-in approval from subscribers before raised against proposed comments wireless platforms, requiring debt sending them any SMS or MMS messages or other 6(a)(1)–1 and 6(a)(2)–1 for reasons that collectors to use FTEU text messaging content from a short code’’). 151 15 U.S.C. 1692c(d). may not offer a solution for all 154 15 U.S.C. 1692c(d). 152 See 15 U.S.C. 1692b, 1692c(b). A debt consumers—a concern that commenters 155 See 84 FR 23274, 23293 (May 21, 2019). 150 collector may communicate with third parties to generally did not address. For these seek location information about consumers, but the 156 See the section-by-section analysis of debt collector may not state that the consumer owes § 1006.2(e). 149 In 2015, a company that develops text message any debt. For additional discussion of these 157 Fed. Trade Comm’n, Statement of Policy surveys estimated that between 83 and 92 percent provisions, see the section-by-section analyses of Regarding Communications in Connection with the of U.S. mobile telephones had unlimited text §§ 1006.6(d) and 1006.10(c). Collection of Decedents’ Debts (July 27, 2011), messaging plans. See Josh Zagorsky, Almost 90% of 153 The Bureau received no comments regarding https://www.ftc.gov/sites/default/files/documents/ Americans Have Unlimited Texting, Instant Census proposed § 1006.6(a)(3), which would have federal_register_notices/statement-policy-regarding- (Dec. 8, 2015), https://instantcensus.com/blog/ implemented FDCPA section 805(d)’s definition communications-connection-collection-decedents- almost-90-of-americans-have-unlimited-texting. regarding a consumer’s guardian. The Bureau is debts-policy-statement/110720fdcpa.pdf (FTC 150 According to one industry website, FTEU is finalizing § 1006.6(a)(3) as proposed and does not Policy Statement on Decedent Debt). supported by six carriers (AT&T, Boost, Sprint, T- address it further in the section-by-section analysis 158 FTC Policy Statement on Decedent Debt, supra Mobile, Verizon Wireless, and Virgin Mobile). below. note 157, at 44918.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76757

the Bureau finds persuasive here.159 In Bureau should add it to the regulation accordance with the notice-and- addition, the Bureau finds that text rather than describing it in comment procedures of the legitimate reasons exist for commentary. One trade group Administrative Procedure Act (APA).163 communications between debt commenter suggested that the Bureau Second, the Bureau declines to expand collectors and a deceased consumer’s expand the description of personal the description of personal surviving spouse or the parents of a representative to encompass anyone that representative to encompass anyone that deceased minor consumer, especially if a debt collector ‘‘has reason to believe’’ a debt collector ‘‘has reason to believe’’ they had previously communicated with is authorized to act on behalf of the is authorized to act on behalf of the a debt collector while the consumer was deceased consumer’s estate. Another deceased consumer’s estate. This alive. For example, such individuals trade group commenter recommended revision is unnecessary because, as the may wish to obtain information from, or incorporating a reference to State law in FTC explained, debt collectors have a continue conversations with, the debt proposed § 1006.6(a)(4) because the variety of tools available to locate collector about the consumer’s financial commenter believed that the term persons authorized to act on behalf of condition. Accordingly, the Bureau is personal representative would not the deceased consumer’s estate, finalizing comments 6(a)(1)–1 and accommodate States that use different including public record searches and 6(a)(2)–1, as proposed, to clarify that language to describe such individuals. location communications, which are surviving spouses and parents of Similarly, an industry commenter discussed in the section-by-section deceased minor consumers, suggested that the Bureau should analysis of final § 1006.10.164 respectively, are consumers for expand proposed § 1006.6(a)(4) by Furthermore, such a standard would be purposes of § 1006.6. adding several terms that might refer to inconsistent with the FDCPA’s individuals handling a deceased treatment of the other persons included 6(a)(4) consumer’s estate. under section 805(d)’s definition of FDCPA section 805(d) defines the A group of consumer advocates stated consumer. Finally, commenters are term consumer for purposes of section that the description of the term personal mistaken in asserting that proposed 805 to include executors and representative would be overly broad § 1006.6(a)(4) and comment 6(a)(4)–1 administrators.160 Proposed unless the Bureau limited it to failed to accommodate State laws that § 1006.6(a)(4) would have implemented individuals ‘‘authorized under State use terms other than personal this aspect of the definition and, in probate or estate law’’ to act on behalf representative. As comment 6(a)(4)–1 commentary, interpreted it to include of the deceased consumer’s estate. For explained, the proposal would have the personal representative of the example, these commenters explained included anyone who performs the deceased consumer’s estate, i.e., any that many people might dispose of a functions of an executor, administrator, person ‘‘authorized to act on behalf of deceased consumer’s assets or personal representative, and does not the estate.’’ 161 extrajudicially by selling or donating require that such persons be identified Several commenters supported the personal possessions and that such by a specific term in State law, such as description of personal representative. people should not be considered personal representative. Thus, an One trade group commenter stated that personal representatives. explicit reference to State law is not the proposal’s accommodation of As described in the proposal and in necessary. informal estate resolution processes the FTC’s Policy Statement on Decedent In response to consumer advocates’ would help prevent consumers from Debt, the ability to resolve the debts of concern that the proposed definition of experiencing frustration when trying to estates outside of the formal probate personal representative was too broad, contact debt collectors to resolve a process through informal processes the Bureau revises comment 6(a)(4)–1 to deceased consumer’s estate. Federal benefits consumers and debt clarify the description of persons who government agency staff commented collectors.162 If a debt collector does not dispose of the deceased consumer’s that the proposal largely mirrored the communicate with an estate because no assets extrajudicially. The Bureau FTC’s Policy Statement on Decedent executor or administrator exists, the understands that, although many Debt and expressed support for the goals debt collector might force the estate into individuals might sell or dispose of a of the proposal. probate, which could substantially deceased consumer’s property A few commenters suggested burden the resources of the estate and extrajudicially, these individuals would modifications to proposed comment the deceased consumer’s heirs or not necessarily ‘‘be authorized to act on 6(a)(4)–1. Three trade group beneficiaries. These burdens may be behalf of the deceased consumer’s commenters stated that the particularly acute for small estates and estate,’’ as the commentary requires. interpretation regarding personal for individuals of limited means. The Bureau is also unaware of any representative was so important that the Probate also adds costs and delays for attempts by debt collectors to interpret debt collectors. Accordingly, the Bureau the FTC’s Policy Statement on Decedent 159 Id. at 44918 n.29 (explaining that Congress is finalizing § 1006.6(a)(4) and its Debt in such a manner. Nevertheless, to created an omnibus definition for ‘‘spouse’’ to apply commentary largely as proposed. increase clarity, final comment 6(a)(4)– in determining the meaning of any Act of Congress, The Bureau finds that certain changes and ‘‘[t]he only court to address whether a 1 refers to ‘‘financial assets or other surviving spouse is a ‘spouse’ within the omnibus requested by commenters are assets of monetary value’’ in describing definition held that a surviving spouse remains a unnecessary. First, it is unnecessary to such individuals. ‘spouse’ in determining the meaning of any Act of incorporate comment 6(a)(4)–1, which For the reasons discussed above, the Congress’’). describes other persons authorized to Bureau is finalizing § 1006.6(a)(4), 160 15 U.S.C. 1692c(d). act on behalf of the deceased 161 See 84 FR 23274, 23293–94 (May 21, 2019). which defines the term consumer for The Bureau adapted this phrasing from Regulation consumer’s estate, into the regulation purposes of § 1006.6 to include Z and explained that it encompassed the same text. The commentary to Regulation F is executors and administrators. Final individuals as those recognized by the FTC’s Policy issued under the same authority as the comment 6(a)(4)–1 clarifies that the Statement on Decedent Debt (i.e., persons with the corresponding provisions of the ‘‘authority to pay the decedent’s debts from the assets of the decedent’s estate’’). See 12 CFR regulation and has been adopted in 163 5 U.S.C. 551 et seq., 701 et seq. 1026.11(c), comment 11(c)–1; FTC Policy Statement 164 See FTC Policy Statement on Decedent Debt, on Decedent Debt, supra note 157, at 44918. 162 See 84 FR 23274, 23294 (May 21, 2019). supra note 157, at 44919–20.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76758 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

terms executor or administrator include One industry commenter stated that consumers for purposes of FDCPA the personal representative of the the Bureau cannot include a confirmed section 805. The Bureau explained that consumer’s estate. A personal successor in interest in implementing FDCPA section 805 recognizes the representative is any person who is FDCPA section 805(d)’s definition of importance of permitting debt collectors authorized to act on behalf of the consumer because the Bureau lacks to communicate with a narrow category deceased consumer’s estate. Persons authority to include persons not of persons other than the individual with such authority may include contemplated by Congress. The who owes or allegedly owes the debt personal representatives under the commenter also questioned how the who, by virtue of their relationship to informal probate and summary Bureau expects a debt collector to that individual, may need to administration procedures of many become aware of the confirmed communicate with the debt collector in States, persons appointed as universal successor in interest. One trade group connection with the collection of the successors, persons who sign commenter identified both benefits and debt. The Bureau further explained that, declarations or affidavits to effectuate risks to the proposal, including the risk given their relationship to the person the transfer of estate assets, and persons presented by failing to have adequate who owes or allegedly owes the debt, who dispose of the deceased consumer’s policies and procedures in place to confirmed successors in interest are— financial assets or other assets of confirm the successor in interest. like the narrow categories of persons monetary value extrajudicially. Another industry commenter stated enumerated in FDCPA section 805(d)— that it identified no risk to permitting the type of persons with whom a debt 6(a)(5) communications between a debt collector needs to communicate about The Bureau proposed to interpret collector and a confirmed successor in the debt. The Bureau therefore FDCPA section 805(d)’s definition of the interest, and that it supported the interpreted the term consumer for term consumer to include confirmed Bureau’s proposal to include a purposes of FDCPA section 805 to successors in interest, as defined in confirmed successor in interest in include a confirmed successor in Regulation X, 12 CFR 1024.31, and § 1006.6(a)’s definition of consumer on interest as that term is defined in Regulation Z, 12 CFR the basis that an individual with an Regulation X, 12 CFR 1024.31, and 1026.2(a)(27)(ii).165 As the Bureau has ownership interest in a particular asset Regulation Z, 12 CFR previously explained, while many will desire open communication 1026.2(a)(27)(ii).174 mortgage servicers are not subject to the regarding the debt. A group of consumer In response to the industry FDCPA, mortgage servicers that advocates also supported proposed commenter’s question regarding how acquired a mortgage loan at the time § 1006.6(a)(5) as ensuring consistent the Bureau expects a debt collector to that it was in default may be subject to communications with surviving become aware of a successor in interest, the FDCPA with respect to that relatives regarding a mortgage on a the Bureau notes that Regulation X mortgage loan.166 As discussed in the home under Regulations X and Z. The § 1024.38(b)(1)(vi) and comment proposal,167 a successor in interest commenter requested that, to avoid 38(b)(1)(vi)–1 clarify that a mortgage under those regulations is, in general, a expanding communications servicer is not required to conduct a person to whom an ownership interest unnecessarily to include the collection search for potential successors in either in a property securing a mortgage of other unrelated debt that the interest if the mortgage servicer has not loan subject to subpart C of Regulation successor in interest may not have received actual notice of their X, or in a dwelling securing a closed- authority to manage, the Bureau clarify existence.175 Comment 38(b)(1)(vi)–1 end consumer credit transaction under that an individual who qualifies as a further explains that a mortgage servicer Regulation Z is transferred under confirmed successor in interest for one may be notified of the existence of a specified circumstances including, for debt (e.g., a home mortgage) is not a potential successor in interest in a example, after a consumer’s death or as confirmed successor in interest for other variety of ways. The comment provides part of a divorce.168 A confirmed types of debt (e.g., a credit card debt) a non-exclusive list of examples of ways successor in interest, in turn, means a and that communications with such an in which a mortgage servicer could be successor in interest once a mortgage individual must be limited to the notified of the existence of a potential servicer has confirmed the successor in mortgage loan that qualified the successor in interest, including that a interest’s identity and ownership individual to be confirmed as a person could indicate that there has interest in the property that secures the successor in interest. been a transfer of ownership or of an The Bureau disagrees that it lacks mortgage loan 169 or in the dwelling.170 ownership interest in the property or authority to include a confirmed The Bureau proposed to include such that a borrower has been divorced, successor in interest in implementing persons in the definition of consumer legally separated, or died, or a person FDCPA section 805(d)’s definition of under § 1006.6 because, given their other than a borrower could submit a consumer because, as the Bureau relationship to the individual who owes loss mitigation application. The explained in the Amendments to the or allegedly owes the debt, confirmed comment also explains that a mortgage 2013 Mortgage Rules under the Real successors in interest are—like the servicer must maintain policies and Estate Settlement Procedures Act narrow categories of persons procedures reasonably designed to (Regulation X) and the Truth in Lending enumerated in FDCPA section 805(d)— ensure that the mortgage servicer can Act (Regulation Z) (2016 Servicing Final the type of individuals with whom a retain this information and promptly Rule),172 and the concurrently issued debt collector needs to communicate facilitate communication with potential FDCPA interpretive rule (2016 FDCPA about the debt.171 successors in interest when a mortgage Interpretive Rule),173 the word servicer is notified of their existence.176 ‘‘includes’’ in FDCPA section 805(d) 165 12 CFR 1024.31, 1026.2(a)(27)(ii). Nothing in this final rule is intended to 166 81 FR 71977, 71978 (Oct. 19, 2016). indicates that section 805(d) is an 167 exemplary, rather than an exhaustive, 84 FR 23274, 23294–95 (May 21, 2019). 174 Id. at 71979; 81 FR 72160, 72181 (Oct. 19, 168 See 12 CFR 1024.31; 1026.2(a)(27)(i). list of the categories of persons who are 2016). 169 12 CFR 1024.31. 175 12 CFR 1024.38(b)(1)(vi); comment 170 12 CFR 1026.2(a)(27)(ii). 172 81 FR 72160 (Oct. 19, 2016). 38(b)(1)(vi)–1. 171 84 FR 23274, 23295 (May 21, 2019). 173 81 FR 71977 (Oct. 19, 2016). 176 81 FR 72160, 72211 (Oct. 19, 2016).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76759

alter the successor in interest provisions the debt collector from communicating proposed to limit attempts to in Regulations X and Z or to impose with the consumer.179 For the reasons communicate as well as additional requirements. discussed below, the Bureau is adopting communications based on In response to the request from a § 1006.6(b) generally as proposed but interpretations of FDCPA sections 806 group of consumer advocates for further with certain revisions designed and 808. FDCPA section 806 prohibits a clarification, the Bureau determines that principally to address commenters’ debt collector from engaging in any the text of proposed § 1006.6(a)(5) was requests for clarification in the conduct the natural consequence of sufficiently clear that a person who commentary to proposed § 1006.6(b).180 which is to harass, oppress, or abuse meets the definition of a confirmed any person in connection with the successor in interest under Attempts To Communicate collection of a debt.183 Specifically, § 1006.6(a)(5) is a confirmed successor The Bureau proposed to clarify in FDCPA section 806(5) provides that in interest with respect to a property § 1006.6(b) that a debt collector is causing a telephone to ring repeatedly securing a mortgage loan or a dwelling prohibited from attempting to or continuously with intent to annoy, securing a closed-end consumer credit communicate with a consumer in the abuse, or harass any person at the called transaction as described above, and that same circumstances in which FDCPA number is an example of conduct the such person is not also a confirmed section 805(a) prohibits the debt natural consequence of which is to successor in interest for other purposes. collector from communicating with the harass, oppress, or abuse. FDCPA As indicated by § 1006.6(a)(5)’s specific consumer. The phrase attempt to section 806(5) thus recognizes that citations to Regulations X and Z, a communicate 181 thus appeared telephone calls may have the natural successor in interest is a person to throughout proposed § 1006.6(b)(1) consequence of harassment, oppression, whom an ownership interest either in a through (4).182 One consumer or abuse if the consumer answers the property securing a mortgage loan commenter supported the Bureau’s telephone call or even if no subject to subpart C of Regulation X, or proposal to include attempts to conversation ensues. A consumer who in a dwelling securing a closed-end communicate within the prohibitions hears a telephone ringing at an consumer credit transaction under proposed in § 1006.6(b) on the basis that inconvenient time or place but who Regulation Z, is transferred, provided the attempt to communicate at the does not answer it may experience the that the transfer meets one of several inconvenient place and time is, in fact, natural consequence of harassment from enumerated conditions.177 The Bureau a concrete harm. A group of consumer the telephone ringing in much the same therefore declines to revise the proposed advocates supported the addition as way as a consumer who answers and regulation text as requested. necessary if the Bureau were to finalize speaks to the debt collector on the For these reasons, and consistent with proposed § 1006.2(j) to allow limited- telephone. For this reason, the Bureau the 2016 Servicing Final Rule and content messages, and as especially adopts its interpretation of FDCPA FDCPA Interpretive Rule, the Bureau is important to prevent debt collectors section 806 as prohibiting a debt finalizing § 1006.6(a)(5) as proposed from sending limited-content messages collector from attempting to with technical revisions as an after a cease communication request or communicate at times when and places interpretation of FDCPA section 805(d). refusal to pay from a consumer pursuant where a communication would be Final § 1006.6(a)(5) provides that, for to proposed § 1006.6(c). One industry prohibited as inconvenient. purposes of § 1006.6, the term consumer commenter did not oppose the Bureau’s FDCPA section 808 prohibits a debt includes a confirmed successor in proposal to include attempts to collector from using unfair or interest, as defined in Regulation X, 12 communicate within the prohibitions unconscionable means to collect or CFR 1024.31, or Regulation Z, 12 CFR under § 1006.6(b) but questioned the attempt to collect any debt.184 A debt 1026.2(a)(27)(ii). Bureau’s reliance on FDCPA sections collector who places a telephone call 806 and 808 to achieve that result on the without any legitimate purpose may 6(b) Communications With a injure persons at the called number Consumer—In General basis that the Bureau would be adding to the conduct that is a violation of even if the call goes unanswered (and, FDCPA section 805(a) restricts how a section 808. Instead, this commenter therefore, is not a communication), and debt collector may communicate with a suggested the Bureau rely only on thus may be engaging in a prohibited consumer in connection with the interpretations of FDCPA sections unfair or unconscionable act under collection of any debt and provides 805(a) and 806. FDCPA section 808. Additionally, certain exceptions to these After considering the comments, the section 808 targets practices that prohibitions.178 The Bureau proposed Bureau is finalizing § 1006.6(b) as pressure a consumer to pay debts the § 1006.6(b) to implement and interpret consumer might not otherwise have FDCPA section 805(a) to specify 179 84 FR 23274, 23295–98 (May 21, 2019). paid. A debt collector’s attempts to circumstances in which a debt collector 180 The Bureau proposed introductory language to communicate at a time when or a place is prohibited from communicating with § 1006.6(b). The Bureau received no comments on where a communication would be a consumer in connection with the that language and considers it largely repetitive of prohibited could pressure the consumer the provisions that follow in § 1006.6(b)(1) through to pay the debt to avoid further collection of any debt, and to interpret (3). The Bureau therefore is not adopting that FDCPA sections 806 and 808 to prohibit language in the final rule. intrusions on the consumer’s privacy, a debt collector from attempting to 181 As discussed in the section-by-section analysis and the Bureau interprets such conduct communicate with a consumer if of § 1006.2(b), the final rule defines an attempt to as unfair or unconscionable under communicate as any act to initiate a communication FDCPA section 808. In response to the FDCPA section 805(a) would prohibit or other contact about a debt with any person through any medium, including by soliciting a industry commenter’s suggestion that 177 See 12 CFR 1024.31; 1026.2(a)(27)(i). response from such person. For example, a debt the Bureau’s interpretation to include 178 15 U.S.C. 1692c(a). Specifically, FDCPA collector who places a telephone call to discuss a attempts to communicate within the section 805(a)(1) prohibits certain communications consumer’s debt that goes unanswered by the prohibitions under § 1006.6(b) not rely at unusual or inconvenient times and places, consumer has attempted to communicate with the on FDCPA section 808, the Bureau section 805(a)(2) prohibits certain communications consumer. with a consumer represented by an attorney, and 182 The phrase attempt to communicate also section 805(a)(3) prohibits certain communications appears in § 1006.14(h), as discussed below. See the 183 15 U.S.C. 1692d. at a consumer’s place of employment. section-by-section analysis of § 1006.14(h). 184 15 U.S.C. 1692f.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76760 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

concludes that its interpretation is A number of industry commenters The Bureau recognizes that the wholly consistent with FDCPA section supported the proposed prohibitions on statutory language under FDCPA section 808’s prohibition on a debt collector contacting a consumer at an 805(a) is broad and, to implement the using unfair or unconscionable means to inconvenient time or place as consistent flexibility afforded under the statute, collect or attempt to collect a debt. The with the statutory prohibitions under proposed to incorporate various section itself states, ‘‘without limiting FDCPA section 805(a), and one industry examples through commentary to the general application of the foregoing, commenter stated that consumer facilitate debt collector compliance. the following conduct is a violation of requests must be respected when it FDCPA section 805(a) specifically states this section,’’ meaning that the general comes to inconvenient times to that a debt collector may not principles of unfairness and communicate. Some industry communicate with a consumer in unconscionability under the FDCPA are commenters requested that the Bureau connection with the collection of any not limited by the specific examples generally provide further clarity debt at any unusual time or place or a listed in FDCPA section 808(1) through regarding inconvenience. For example, time or place ‘‘known or which should (8). Consistent with that interpretation, one industry commenter stated that be known’’ to be inconvenient to the and pursuant to its authority under FDCPA section 805(a) and proposed consumer.188 Given this statutory FDCPA section 814(d) to write rules § 1006.6(b)(1) are very broad and leave provision, the Bureau declines with respect to the collection of debts by too much room for interpretation and commenters’ requests to omit the debt collectors, the Bureau adopts its requested that the Bureau make ‘‘should be known’’ standard from interpretation of FDCPA section 808 as § 1006.6(b)(1) more specific. § 1006.6(b)(1). The Bureau also notes prohibiting a debt collector from Other industry commenters went that any costs of coming into attempting to communicate at times further to suggest that the Bureau not compliance to record and respect a when and places where a incorporate certain language from consumer’s designations of communication would be prohibited as FDCPA section 805(a) in § 1006.6(b)(1) inconvenient times (or places) are not a inconvenient. regarding inconvenient time and place. result of the Bureau’s adopting Some such commenters took issue with § 1006.6(b)(1), but rather arise from 6(b)(1) Prohibitions Regarding Unusual the Bureau’s incorporation of the compliance with FDCPA section 805(a). or Inconvenient Times or Places statutory language in FDCPA section For the same reason, the Bureau FDCPA section 805(a)(1) prohibits a 805(a) regarding a time or place ‘‘which declines to rely only on the statutorily debt collector from, among other things, should be known to be inconvenient to prescribed presumptively convenient communicating with a consumer in the consumer,’’ 186 with some times, as suggested by one commenter. connection with the collection of any commenters stating that ‘‘should be Just as the presumptively convenient debt at any unusual time or place, or at known’’ is too high a standard, creates times are statutorily prescribed, so is the a time or place that the debt collector unreasonable expectations, is ability for a consumer to designate knows or should know is inconvenient unnecessary, and should be removed additional convenient (or inconvenient) to the consumer, subject to certain from the rule. One trade group times for debt collection exceptions. And, as discussed further in commented specifically on the ‘‘should communications.189 Nevertheless, as the section-by-section analysis of know’’ standard for times and suggested explained in detail below, the Bureau is § 1006.6(b)(1)(i), FDCPA section that the rule should omit any reference finalizing comments 6(b)(1)–1 and –2 to 805(a)(1) establishes certain times that, to consumer-designated inconvenient include various additional illustrations in the absence of knowledge to the times and rely only on statutorily in response to commenters’ requests for contrary, a debt collector shall assume presumptive convenient times. clarity. Accordingly, the Bureau adopts are convenient for debt collection Similarly, one industry commenter a flexible approach while clarifying the communications. The Bureau proposed suggested that, because FDCPA section contours of permissible and prohibited § 1006.6(b)(1) and comment 6(b)(1)–1 to 805(a)(1) provides presumptively debt collector communications with a generally implement and interpret convenient hours of contact (i.e., after consumer to assist debt collectors in FDCPA section 805(a)(1)’s time and 8:00 a.m. and before 9:00 p.m.), further complying with the final rule. place restrictions, with proposed limiting this timeframe by adopting a One trade group commenter suggested comment 6(b)(1)–1 clarifying how a debt rule that would permit a consumer to that the statutory prohibition against collector knows or should know that a also designate inconvenient times that a communicating during inconvenient time or place is inconvenient based on debt collector ‘‘should know’’ are times and places shift altogether from a information received from the inconvenient would unduly limit the one-size-fits-all paradigm suited for consumer, i.e., based on a consumer’s ability of a debt collector to reach a 1977 when the FDCPA was enacted to designation of that time or place as consumer to discuss the account. a presumption that consumers can inconvenient. Proposed § 1006.6(b)(1)(i) Another industry commenter stated that control when they would like to be and its commentary specifically the requirement to keep track of what contacted. And another trade group addressed time restrictions. Proposed times are inconvenient to a consumer commenter encouraged the Bureau to § 1006.6(b)(1)(ii) specifically addressed will increase costs to debt collectors. adopt a reasonableness standard to place restrictions.185 With respect to place, one industry prevent consumers from designating all, commenter stated that, given the or almost all, times as inconvenient, or 185 In this section-by-section analysis, the Bureau difficulties presented by mobile to require consumers to answer certain addresses feedback regarding inconvenience and technology, the Bureau should remove questions to trigger the protections on the ‘‘know or should know’’ standard generally, or the reference to inconvenient place from that focused on proposed comment 6(b)(1)–1 187 regarding a consumer’s designation of time or place the rule altogether. 188 15 U.S.C. 1692c(a)(1). as inconvenient. To the extent that comments 189 Therefore, unless an exception in FDCPA focused on specific aspects of either the proposed 186 15 U.S.C. 1692c(a)(1). section 805(a) or final § 1006.6(b)(4) applies, a debt time restrictions or the proposed place restrictions, 187 For further discussion of communications or collector is required to abide by a consumer’s those comments are addressed in the section-by- attempts to communicate at unusual or designation of inconvenient times, even if those section analysis of § 1006.6(b)(1)(i) or (ii), inconvenient places, see the section-by-section times are presumptively convenient according to respectively. analysis of § 1006.6(b)(1)(ii). the statute.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76761

communications at inconvenient times commenters expressed concerns requirements. The Bureau determines or places. regarding the difficulty associated with that a flexible approach is necessary The statutory standard under FDCPA a creditor transferring information about when it comes to communications, section 805(a)(1) is one of a consumer’s inconvenience which by their very nature are dynamic, inconvenience. Additionally, the statute designations to a debt collector. Another depend upon the specific does not limit a consumer’s ability to industry commenter stated that circumstances, and differ from invoke the protections afforded under proposed comment 6(b)(1)–1 neglected consumer to consumer. Such fluid FDCPA section 805(a)(1) based on a to account for the significant amounts of communications cannot be scripted, nor reasonableness standard, and therefore information that may be available to a can every permutation be anticipated. it would not be appropriate for this rule debt collector and whether the debt The Bureau therefore is finalizing its to do so. Nor would such a limitation collector is bound to some duty of proposed interpretation of FDCPA comport with the protections afforded a inquiry with respect to such section 805(a)(1), which refers to what consumer under FDCPA section 805(c), information. is ‘‘inconvenient to the consumer,’’ which requires a debt collector to cease The proposal would not have required without specifying that a consumer further communications with the any transfer of information regarding a must designate communications as consumer upon the consumer’s written consumer’s inconvenience designations inconvenient using the word notification, or under FDCPA section from a creditor or previous debt ‘‘inconvenient.’’ 806, which prohibits a debt collector collector to the current debt collector, One industry commenter stated the from engaging in conduct the natural and nor does this final rule. However, word ‘‘inconvenient’’ should not be a consequence of which is to harass, to illustrate a situation in which a debt tool for a consumer to prevent oppress, or abuse any person in collector knows or should know that communication with a debt collector. connection with the collection of a debt. specific times are inconvenient to a However, FDCPA section 805(a)(1) For all of these reasons, the Bureau is consumer based on recent notes in a file explicitly recognizes that finalizing the general standard in from the creditor placing the debt for communications must not occur at a § 1006.6(b)(1) as proposed to implement collection, the Bureau includes a new time or place known or which should be and interpret FDCPA section 805(a)(1). example in final comment 6(b)(1)–1.i. known to be inconvenient to the Specificity of designation. As noted consumer. The Bureau notes that a Consumer Designation of Inconvenient above, the Bureau proposed that, even if consumer also has the option under Times or Places a consumer does not use the word FDCPA section 805(c) to notify a debt The Bureau proposed comment ‘‘inconvenient’’ to notify the debt collector to cease communications with 6(b)(1)–1 to provide general collector, the debt collector may the consumer altogether. Therefore, it interpretations and illustrations of the nevertheless know, or should know, serves not only consumers but also debt time and place restrictions in based on the facts and circumstances, collectors for communications to occur § 1006.6(b)(1), including how a debt that a time or place is inconvenient to at times and places that are convenient collector knows or should know that a the consumer. Some industry to the consumer, and to avoid requiring time or place is inconvenient to a commenters suggested shifting the onus consumers to perform specific actions or consumer. The Bureau proposed this to the consumer to utter specific words require precise responses or utterances comment to clarify one aspect of the or undertake certain actions to trigger to achieve the protections under FDCPA knowledge standard for time and place, the FDCPA’s communication section 805(a), lest consumers more that is, that a debt collector knows or protections. Two industry commenters simply resort to notifying debt collectors should know that a time or place is suggested that it would be reasonable to under FDCPA section 805(c) to cease inconvenient if the consumer designates require a consumer to use some specific further communication. it as such. Proposed comment 6(b)(1)–1 language to put a debt collector on Some industry commenters asked the provided general interpretations and notice that contact at a certain time or Bureau to clarify how debt collectors illustrations regarding consumer place is inconvenient. One trade group may appropriately determine a time or designation, including that a debt commenter stated that the rule should place is inconvenient if a consumer collector knows or should know that a require, as a trigger to compliance, gives unclear, vague, or ambiguous time or place is inconvenient even if the consumers to use words that reasonably instructions, or insufficient information consumer does not use the word identify for a debt collector the for the debt collector to identify when ‘‘inconvenient.’’ For the reasons inconvenient times during which the or where the consumer does not want to discussed below, the Bureau is debt collector should refrain from be contacted. Some trade group finalizing comment 6(b)(1)–1 with contact. commenters suggested that a debt revisions to address feedback.190 One consumer commenter supported collector be permitted to ask a consumer Information transfer. One trade group the proposal not to require that the follow-up questions to obtain more commenter read the proposal as consumer utter specific words to invoke specific information to honor the imposing a substantial information the protections under FDCPA section consumer’s request. Two trade group transfer requirement on a debt collector 805(a) on the basis that how a consumer commenters suggested that, unless a and worried that it would require debt expresses what is convenient or consumer provides readily collectors to rely upon the previous inconvenient should not be restricted to understandable instructions as to the holder of the debt for details that can be approved words as an excuse for a debt scope of any identified inconvenient excessively subjective. Some industry collector’s noncompliance. time or place, a debt collector should be The Bureau declines to restrict how a permitted to continue contacting the 190 While proposed comments 6(b)(1)–1.ii and .iv consumer may designate a time or place consumer as if no designation had been also addressed consumer-initiated communications as inconvenient. The statute does not made. at times previously designated as inconvenient, for prescribe any specific actions or require The Bureau understands that a organizational purposes, the Bureau is finalizing precise responses or utterances on consumer’s articulation of those examples under new comment 6(b)(1)–2.i and .ii and accordingly discusses feedback about those behalf of the consumer to invoke these inconvenience sometimes may require comments in the section-by-section analysis of communications protections, and nor further clarification. Because the comment 6(b)(1)–2 below. does this final rule impose such standard in FDCPA section 805(a)(1) is

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76762 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

based on what is ‘‘inconvenient to the inconvenient to a consumer. Proposed time or place is convenient to the consumer,’’ 191 the consumer is the best comment 6(b)(1)–1.iii assumed that a consumer. An academic commenter as source of information for the debt consumer tells a debt collector not to well as a group of consumer advocates collector to learn when is an communicate with the consumer at supported such a requirement, with the inconvenient time or where is an school. Based on these facts, proposed group of consumer advocates stating inconvenient place. To clarify this point comment 6(b)(1)–1.iii explained, the that asking a consumer whether the time and to provide debt collectors guidance debt collector knows or should know or place is convenient is a best practice in circumstances in which the debt that communications to the consumer at for telephone calls or in-person collector needs additional clarity or school are inconvenient and, thereafter, communications and requesting the information from the consumer, the the debt collector must not Bureau adopt that approach. A number Bureau is revising comment 6(b)(1)–1 to communicate or attempt to of industry commenters disagreed, specifically state that the debt collector communicate with the consumer at that stating that such a requirement would may ask follow-up questions regarding place. The Bureau received many be impractical and cumbersome as part whether a time or place is convenient to comments from industry asking how, in of a lengthy telephone call introduction clarify statements by the consumer. The light of technology such as mobile that already requires verifying the Bureau determines that this approach telephones, which consumers can take consumer’s identity and providing will allow consumers to exercise their with them everywhere, a debt collector various disclosures. One trade group right to limit communications at could be sure to avoid contacting a commenter suggested that such a long inconvenient times and places while consumer at an inconvenient place. introduction would annoy the decreasing uncertainty for debt Industry commenters requested that the consumer, and another stated that the collectors. Accordingly, the Bureau Bureau either remove the example or natural reaction to receiving a call from revises the example proposed as revise it to include specific times or an unknown individual who inquires comment 6(b)(1)–1.i, now finalized as other information from the consumer whether the call is convenient would be comment 6(b)(1)–1.ii, to illustrate such that would enable the debt collector to to respond that the call is inconvenient. an exchange between a debt collector know when the consumer is at the The Bureau agrees that it would be and a consumer. inconvenient place, suggesting that, impractical to require debt collectors to Other industry commenters requested without such information, the debt ask consumers at the outset of every that the Bureau clarify how the rule collector would have to make debt collection communication whether applies if a consumer answers a assumptions about the consumer’s the time or place is convenient. A debt telephone call from a debt collector, whereabouts. collector, of course, is free to ask this states that the consumer is ‘‘busy right To address these concerns, the Bureau question and may find that it is a now’’ or ‘‘cannot talk right now,’’ and is revising the example in comment natural question that arises as part of a immediately hangs up the telephone. If 6(b)(1)–1.iii. Final comment 6(b)(1)–1.iii communication with a consumer. a debt collector does not have an illustrates that once a debt collector However, the Bureau does not believe opportunity to ask a consumer follow- knows or should know that that such a requirement is necessary or up questions because the consumer has, communications to a place are warranted to implement FDCPA section for example, abruptly ended a telephone inconvenient to a consumer, unless the 805(a)(1). call, the standards regarding telephone consumer otherwise informs the debt For the reasons discussed above, the call frequencies in § 1006.14(b)(2) may collector that the place is no longer Bureau is finalizing comment 6(b)(1)–1 be instructive in assisting a debt inconvenient, § 1006.6(b)(1)(ii) prohibits regarding a consumer’s designation of collector in determining when the debt the debt collector from communicating an inconvenient time or place to collector may call the consumer or attempting to communicate with the provide that a debt collector knows or again.192 Although § 1006.6(b)(1) would consumer at that place, including by should know that a time or place is not require a debt collector to construe sending mail to the address associated inconvenient to a consumer if the a consumer’s statement that the with that place and by placing calls to consumer uses the word ‘‘inconvenient’’ consumer is ‘‘busy right now’’ or the landline telephone number at that to notify the debt collector. In addition, ‘‘cannot talk right now’’ without place. And in response to commenters’ depending on the facts and anything further to mean that the request for further clarification circumstances, the debt collector knows consumer is generally designating that regarding when a consumer is at an or should know that a time or place is time or place as inconvenient for future inconvenient place, consistent with the inconvenient even if the consumer does communications, the statement does addition to comment 6(b)(1)–1 not specifically state to the debt indicate that the time or place is discussed above that a debt collector collector that a time or place is inconvenient for current may ask follow-up questions regarding ‘‘inconvenient.’’ Final comment 6(b)(1)– communications. whether a time or place is convenient to 1 also provides that a debt collector may Inconvenient places. As part of clarify statements by a consumer, a debt ask follow-up questions regarding proposed comment 6(b)(1)–1, the collector may ask a consumer to identify whether a time or place is convenient to Bureau included an example in times associated with an inconvenient clarify statements by the consumer and, proposed comment 6(b)(1)–1.iii to place. For further discussion regarding as discussed above, includes three illustrate when a debt collector knows communications or attempts to illustrative examples. communicate at an inconvenient place, or should know that a place is Consumer-Initiated Communications at see the section-by-section analysis of Previously Designated Inconvenient 191 § 1006.6(b)(1)(ii). 15 U.S.C. 1692c(a)(1). Times or Places 192 See the section-by-section analysis of Duty To Inquire § 1006.14(b)(2) presuming compliance with As part of proposed comment 6(b)(1)– § 1006.14(b)(1) if a debt collector places a telephone The Bureau did not propose to 1, the Bureau proposed to clarify that, call to a particular person in connection with the require, but requested comment on if a consumer initiates a communication collection of a particular debt not within a period of seven consecutive days after having had a whether to require, a debt collector to with a debt collector at a time or from telephone conversation with the person in ask a consumer at the outset of all debt a place that the consumer previously connection with the collection of such debt. collection communications whether the designated as inconvenient, the debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76763

collector may respond once; but time or place previously designated by the consumer conveys that the time or thereafter, the debt collector must not the consumer remains inconvenient. place is no longer inconvenient, unless communicate or attempt to The final rule further clarifies the an exception in § 1006.6(b)(4) applies. communicate further with the consumer scope of a debt collector’s one permitted Comment 6(b)(1)–2 also includes four at that time or place until the consumer reply by specifying in final comment examples illustrating how a debt conveys that the time or place is no 6(b)(1)–2 that the debt collector’s one collector may comply with longer inconvenient. The Bureau also reply must be through the same medium § 1006.6(b)(1) if a consumer initiates a proposed two illustrative examples. The of communication used by the communication with a debt collector at Bureau is finalizing this aspect of consumer to initiate the a time or from a place that the consumer proposed comment 6(b)(1)–1 as communication. For example, if a previously designated as inconvenient, comment 6(b)(1)–2, with revisions and consumer sends a debt collector a text with the third example focused on additional examples in response to message at a time the consumer websites and mobile applications, and feedback as discussed below. previously designated as inconvenient, the fourth example focused on One consumer commenter supported the debt collector may reply once by automated replies. the proposal’s approach to permit one text message; but unless the consumer The first two examples under reply as protective of consumers and a provided prior consent to receive a comment 6(b)(1)–2 were proposed as fair compromise to debt collectors. A telephone call, for example, the debt comments 6(b)(1)–1.ii and .iv, number of industry commenters collector may not reply once by placing respectively. The Bureau is revising requested clarification regarding the a telephone call to the consumer. The these examples consistent with the scope of a debt collector’s one permitted Bureau finds that a consumer-initiated discussion above that a debt collector’s reply if a consumer initiates a communication is, by its nature, not one permitted reply must be through the communication with a debt collector at inconvenient to the consumer, and that same medium of communication used a time or from a place that the consumer includes the medium of communication by the consumer in initiating the previously designated as inconvenient. used by the consumer to initiate that communication, and is finalizing them Industry commenters suggested that, if a communication. Because the consumer as comments 6(b)(1)–2.i and .ii. These consumer contacts a debt collector initiated the communication, the debt two examples illustrate a debt collector during a time that the consumer collector neither knows nor should responding once through the same previously designated as inconvenient, know that responding to that medium of communication used by the the debt collector either should be able communication through the same consumer before the expiration of the consumer’s otherwise inconvenient time to ask if the consumer has revoked the medium of communication is or place designation. inconvenience designation or should be inconvenient to the consumer.193 The third example under comment Additionally, if a consumer designates a able to assume that the consumer has 6(b)(1)–2.iii relates to websites and period of time as inconvenient and done so. One trade group commenter mobile applications. As discussed in the subsequently initiates a communication requested that the Bureau clarify section-by-section analysis of final with a debt collector during that time, whether a debt collector’s unanswered § 1006.2(b) and (d), some industry although the debt collector may wait for call to a consumer would constitute the commenters asserted that the proposed the inconvenient time period to expire debt collector’s one reply. definitions of attempt to communicate before contacting the consumer, final In response to commenters’ and communicate or communication comment 6(b)(1)–2.i and .ii, discussed suggestions, the Bureau notes that a debt would include information provided to below, illustrate that the debt collector collector is not prohibited from consumers who visit or navigate a debt may respond once during the inquiring in the one permitted reply collector’s website or online portal.195 inconvenient time period on that day. whether the consumer is revoking the Such information may constitute an Accordingly, final comment 6(b)(1)–2 inconvenient time or place designation. attempt to communicate or a states that, if a consumer initiates a However, the consumer’s act of simply communication depending on its communication with a debt collector at initiating a communication does not content. However, as the example in a time or from a place that the consumer revoke the inconvenient time or place comment 6(b)(1)–2.iii illustrates, when a previously designated as inconvenient, designation. As comment 6(b)(1)–2 consumer initiates a communication by the debt collector may respond once at explains, after a debt collector’s one navigating a debt collector’s website or that time or place through the same permitted response, § 1006.6(b)(1) using a debt collector’s mobile medium of communication used by the prohibits the debt collector from application at a time or from a place that consumer.194 After that response, communicating or attempting to the consumer previously designated as § 1006.6(b)(1) prohibits the debt communicate further with the consumer inconvenient, § 1006.6(b)(1) does not collector from communicating or at that time or place until the consumer prohibit the debt collector from attempting to communicate further with conveys that the time or place is no conveying information to the consumer the consumer at that time or place until longer inconvenient, unless an about the debt through the website or exception in § 1006.6(b)(4) applies. mobile application. Accordingly, Additionally, in response to the trade 193 The Bureau notes, however, that some automated processes that would occur through comment 6(b)(1)–2.iii provides clarity group commenter’s request for further different communication media, such as two-factor regarding websites and mobile clarity, the Bureau determines that a authentication, may be permissible because they are applications. debt collector’s unanswered call does not attempts to communicate or communications if The final example under comment constitute the debt collector’s one they are not about the debt. Alternatively, a consumer may provide prior consent to receive 6(b)(1)–2.iv is focused on automated permitted reply as described under such communications, including, for example, replies. The Bureau received a number comment 6(b)(1)–1. However, nothing providing prior consent to receive confirmation of of comments requesting that the Bureau prohibits the debt collector from payment by email or text message when making a clarify how § 1006.6(b)(1) applies to communicating or attempting to payment on a debt collector’s website at a time or from a place that the consumer previously such replies. Specifically, several communicate at times or places that are designated as inconvenient. not inconvenient to the consumer, 194 For more on medium of communication, see 195 Those comments are summarized in the including to ask the consumer if the § 1006.14(h) and its associated commentary. section-by-section analyses of § 1006.2(b) and (d).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76764 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

industry commenters expressed concern consumer.198 FDCPA section 805(a)(1) communications. A group of State regarding the circumstance in which a specifies that, in the absence of Attorneys General supported applying consumer initiates an electronic knowledge of circumstances to the § 1006.6(b)(1)(i) to electronic communication, such as an email or text contrary, a debt collector shall assume communications and agreed with the message, with a debt collector at a time that the convenient time for proposal to extend the FDCPA’s or from a place that the consumer communicating with a consumer is after limitation on permissible hours of previously designated as inconvenient, 8:00 a.m. and before 9:00 p.m., local communications to newer and the debt collector’s system time at the consumer’s location. communication media including, but generates an automated reply to confirm The Bureau proposed § 1006.6(b)(1)(i) not limited to, email, text messaging, receipt of the consumer’s message and to implement and interpret FDCPA and social media. Many industry inform the consumer when a response section 805(a)(1)’s prohibition regarding commenters, in contrast, expressed from the debt collector might be unusual or inconvenient times.199 The concern about the proposed approach. expected. Some industry commenters Bureau interpreted the language in One industry commenter supported also expressed concern over an FDCPA section 805(a)(1) that a debt permitting debt collector automated reply generated in response collector shall assume that the communications by telephone call or to a consumer-initiated communication convenient time for communicating text message during the presumptively received during the presumptively with a consumer is after 8:00 a.m. and convenient hours between 8:00 a.m. and inconvenient times between 9:00 p.m. before 9:00 p.m. to mean that a time 9:00 p.m., local time, as fair and and 8:00 a.m., local time at the before 8:00 a.m. and after 9:00 p.m. local reasonable, but requested that the consumer’s location. One trade group time at the consumer’s location is Bureau exempt email and text messages commenter suggested model language inconvenient, unless the debt collector from consumer-designated inconvenient for an automated reply that would not has knowledge of circumstances to the time and place restrictions. Several meet the definitions of attempt to contrary. Comments regarding proposed industry commenters stated that, communicate or communication under § 1006.6(b)(1)(i) fell into three main although a debt collector’s telephone § 1006.2(b) and (d).196 categories, as discussed below. calls to a consumer should adhere to the As discussed above, the Bureau finds Existing Violations of FDCPA Section inconvenient time restrictions, the that a consumer-initiated 805(a)(1) Bureau should except email or text communication is, by its nature, not messages or both from any time Several individual consumers noted inconvenient to the consumer and that restrictions, thereby permitting that, notwithstanding the prohibition in the debt collector may respond once, electronic messages to be sent by a debt FDCPA section 805(a)(1), they have including by automated reply, through collector to a consumer at any time. A received hateful and threatening debt the same medium of communication number of these commenters suggested collection calls before 8:00 a.m., after used by the consumer. The Bureau is that electronic communications such as 9:00 p.m., and during all hours of the adopting comment 6(b)(1)–2.iv to clarify email messages are distinct in nature night. The Bureau notes that the FDCPA that, if a consumer initiates a from other media of communication, as imposes a specific presumption against communication by sending an email are the ways in which a consumer may communicating with a consumer before message at a time or from a place that determine whether to engage with such 8:00 a.m. and after 9:00 p.m., local time the consumer previously designated as communications. One industry at the consumer’s location regardless of inconvenient or that is presumptively commenter suggested that requiring the content of the communication.200 inconvenient, the debt collector is not In electronic messages to adhere to prohibited from responding once, such the absence of knowledge of inconvenient time restrictions puts debt as by sending a system-generated circumstances to the contrary, a debt collectors at a competitive disadvantage collector’s communications with a automated email reply.197 because no other industry has such a consumer before 8:00 a.m. and after 9:00 restriction, while another industry 6(b)(1)(i) p.m. are inconvenient to the consumer commenter suggested that, because and are prohibited under FDCPA FDCPA section 805(a)(1) provides, in internet service providers limit the section 805(a)(1) and final frequency of outgoing email messages, relevant part, that a debt collector may § 1006.6(b)(1)(i). Depending on the facts not communicate with a consumer in such communications should not be and circumstances, communications subject to any further restrictions, connection with the collection of any made at prohibited times in violation of debt at any unusual time, or at a time including the inconvenient time § 1006.6(b)(1)(i) may also violate other restrictions under proposed that the debt collector knows or should provisions of the FDCPA or this final know is inconvenient to the § 1006.6(b)(1)(i). This same industry rule. commenter also suggested that the 196 As discussed in the section-by-section Inconvenient Times and Electronic Bureau exclude email messages from the analyses of § 1006.2(b) and (d), other commenters Communications definition of ‘‘communication’’ in suggested that the Bureau exclude automated proposed § 1006.6(b)(1)(i). One trade The Bureau received several replies from the definitions of attempt to group commenter suggested that the communicate and communication. Those comments on the general application of unsubscribe instructions in proposed comments are addressed in the section-by-section § 1006.6(b)(1)(i)’s inconvenient time § 1006.6(e) would sufficiently protect analyses of § 1006.2(b) and (d). prohibition to electronic 197 In response to comments concerned with an consumers, such that subjecting automated reply generated in response to a electronic communications to consumer-initiated communication received during 198 15 U.S.C. 1692c(a)(1). the presumptively inconvenient times between 9:00 199 As discussed in the section-by-section analysis inconvenient time restrictions was p.m. and 8:00 a.m., local time at the consumer’s of § 1006.6(b), § 1006.6(b)(1)(i) also interprets unnecessary. Some industry location, the Bureau believes that the consumer FDCPA sections 806 and 808 to prohibit a debt commenters stated that the difficulty initiating a communication between those times collector from attempting to communicate with a lies with technology and the inability of may constitute the debt collector’s ‘‘knowledge of consumer at a time when FDCPA section 805(a)(1) their software to time-stamp and track circumstances to the contrary’’ under would prohibit the debt collector from § 1006.6(b)(1)(i). See the section-by-section analysis communicating with the consumer. electronic communications, and with of § 1006.6(b)(1)(i). 200 See 15 U.S.C. 1692c(a)(1). the associated costs of having to do so.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76765

The statutory requirement under attempt to communicate with a are inconsistent. The Bureau is FDCPA section 805(a)(1) broadly applies consumer in connection with the finalizing comment 6(b)(1)(i)–2 largely to all debt collection communications collection of any debt at any unusual as proposed, with certain clarifications with a consumer, without time, or at a time that the debt collector in response to comments, as discussed distinguishing between communication knows or should know is inconvenient below. media.201 Consistent with the statute, to the consumer. In the absence of the A group of consumer advocates the Bureau interprets FDCPA section debt collector’s knowledge of supported proposed comment 6(b)(1)(i)– 805(a)(1) to apply § 1006.6(b)(1)(i)’s circumstances to the contrary, a time 2 as a commonsense interpretation that inconvenient time prohibition to before 8:00 a.m. and after 9:00 p.m. local will protect consumers and give helpful electronic communications and not just time at the consumer’s location is guidance to debt collectors. One to telephone calls, for example, with the inconvenient. consumer advocate suggested that the consumer. The Bureau proposed comment better course is to require debt collectors In response to industry comments 6(b)(1)(i)–1 to clarify that, for purposes to determine whether a telephone suggesting that the costs associated with of determining the time of an electronic number is a cellular or landline compliance will be burdensome, communication under § 1006.6(b)(1)(i), telephone. One trade group commenter although this final rule does not require an electronic communication occurs supported the idea of a safe harbor but electronic communications by debt when the debt collector sends it, not, for suggested revising it to protect debt collectors, it provides clarity for a debt example, when the consumer receives collectors when they use the time collector who elects to send electronic or views it. Two trade group period during which communications communications to a consumer. commenters agreed with the proposed would be convenient in both locations interpretation. One consumer as indicated by the zip code of the Decedent Debt Waiting Period commenter also supported it but residence and the area code of the Although the Bureau did not propose suggested that the time of receipt by the telephone. to define a period after a consumer’s consumer should control instead. And a One industry commenter stated that death as an inconvenient time for group of consumer advocates supported debt collectors have no practical way of communicating about the deceased the proposed interpretation but knowing the local time for a consumer consumer’s debt with surviving spouses requested that the Bureau further clarify at any particular point in time, and that or parents (in the case of deceased that ‘‘sending’’ does not include a debt collector would be required to minor consumers) or persons acting as scheduling a message for later delivery. keep track of the consumer’s executors, administrators, or personal The Bureau proposed the clarification whereabouts to avoid communicating at representatives of a deceased in comment 6(b)(1)(i)–1 to assist debt inconvenient times. One industry consumer’s estate, the Bureau requested collectors who elect to send consumers commenter suggested that the Bureau comment on this topic.202 The FTC electronic communications in amend the proposed commentary to declined to adopt such a waiting period complying with § 1006.6(b)(1)(i). As the permit a debt collector to communicate in its Policy Statement on Decedent Bureau stated in the proposal, ambiguity with a consumer at times that are Debt because it did not have a sufficient exists about whether, for purposes of convenient in any location in which the record to establish the necessity of a FDCPA section 805(a)(1), an electronic consumer might be located, or waiting period or the optimal length of communication occurs at the time of alternatively, that the debt collector such a period. While the Bureau sending by the debt collector or at the should be responsible only for the area received some comments on this issue, time of receipt or viewing by the code, address of record, and locations it likewise does not have a sufficient consumer. A debt collector can control explicitly communicated by the basis to determine whether to impose the time at which it chooses to send consumer. Several industry commenters such a waiting period or the proper communications, whereas it often stated that a debt collector should be duration of such a waiting period. would be impossible for a debt collector permitted to rely on the address of Therefore, the Bureau declines to to determine when a consumer receives record or last known physical address include a waiting period in the final or views an electronic communication. because, as one commenter explained, rule. The Bureau determines that a bright-line telephones are portable and the area For the reasons discussed above, the rule that clarifies that an electronic code is no longer a reliable source of the Bureau is finalizing § 1006.6(b)(1)(i) as communication occurs when the debt consumer’s location. Specifically, one proposed to provide that, except as collector sends it makes it possible for trade group commenter requested that provided in § 1006.6(b)(4), a debt a debt collector to comply with the final mortgage servicers be allowed to collector must not communicate or rule. The Bureau also clarifies that determine call times based on the sending for purposes of comment single, established billing address. The Bureau is adopting this safe 201 While commenters raised questions regarding 6(b)(1)(i)–1 does not include scheduling new communication media and § 1006.6(b)(1)(i)’s a message at one time for delivery at a harbor to facilitate a debt collector’s prohibition on communicating or attempting to later time. For these reasons, the Bureau compliance with § 1006.6(b)(1)(i) when communicate with a consumer at an inconvenient is finalizing comment 6(b)(1)(i)–1 as the debt collector has conflicting or time, none requested clarification regarding mailed proposed, with minor revisions. ambiguous information regarding a communications. The Bureau understands that a consumer’s designation of a time as inconvenient The Bureau also proposed comment consumer’s location. As proposed, under FDCPA section 805(a)(1) has not prevented 6(b)(1)(i)–2 to provide a safe harbor and comment 6(b)(1)(i)–2 stated that the safe debt collectors from sending communications by illustrate how a debt collector could harbor would apply if the debt collector mail through the United States Postal Service. comply with proposed § 1006.6(b)(1)(i) is unable to determine the consumer’s Unlike mail, the time at which an electronic communication, such as an email or text message, and FDCPA section 805(a)(1) if the debt location. In response to the commenter is sent generally correlates with the time of receipt. collector has conflicting or ambiguous that a debt collector would be required Therefore, § 1006.6(b)(1)(i)’s prohibition on information regarding a consumer’s to keep track of a consumer’s communicating or attempting to communicate with location, such as telephone numbers whereabouts, the Bureau revises this a consumer at an inconvenient time generally does not apply to mail in the same manner as it does to with area codes located in different time language to clarify that the safe harbor electronic communications. zones or a telephone number with an would apply if the debt collector has 202 See 84 FR 23274, 23296 (May 21, 2019). area code and a physical address that conflicting or ambiguous information

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76766 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

regarding the consumer’s location. A the locations at which the debt industry commenter suggested that the debt collector is not required to collector’s information indicates the statutory language ‘‘at any unusual . . . determine where the consumer actually consumer might be located. Comment place’’ be removed from § 1006.6(b)(1) is located when communicating or 6(b)(1)(i)–2 also provides two examples based on the difficulties presented when attempting to communicate with the of how a debt collector complies with a consumer could be at an ‘‘unusual consumer and knowledge that a § 1006.6(b)(1)(i). place’’ (e.g., a funeral), but without telephone number is associated with a knowing where the consumer is, the 6(b)(1)(ii) mobile telephone does not, without debt collector calls the consumer’s more, create conflicting or ambiguous FDCPA section 805(a)(1) provides, in mobile telephone. information. A debt collector with relevant part, that a debt collector may The Bureau recognizes that mobile conflicting information may know or not communicate with a consumer in technology has shifted how and where should know that it is inconvenient to connection with the collection of any communications occur and may make it communicate or attempt to debt at any unusual place, or at a place more difficult for a debt collector to communicate with a consumer at a time that the debt collector knows or should know where a consumer is at the precise outside of the presumptively convenient know is inconvenient to the moment when the debt collector is times (8:00 a.m. to 9:00 p.m.) in any of consumer.203 As proposed, communicating or attempting to the time zones in which the consumer § 1006.6(b)(1)(ii) would have communicate with the consumer. In this might be located. As the Bureau implemented this prohibition and regard, the Bureau notes that the FDCPA explained in the proposal, some debt generally restated the statute, with only does not require a debt collector to track collectors already have adopted this minor changes for clarity. The Bureau is a consumer’s whereabouts; it prohibits approach for determining convenient finalizing § 1006.6(b)(1)(ii) as communications with a consumer at any times to contact a consumer if the debt proposed.204 Accordingly, unusual place, or a place that the debt collector has conflicting location § 1006.6(b)(1)(ii) states that except as collector knows or should know is information for the consumer. provided in § 1006.6(b)(4), a debt inconvenient to the consumer. This safe harbor would apply in collector must not communicate or To further clarify how the FDCPA’s circumstances in which the debt attempt to communicate with a prohibition regarding unusual and collector does not have knowledge of consumer in connection with the inconvenient places applies in the the consumer’s location and can rely collection of any debt at any unusual context of mobile technology, the only on information indicating where place, or at a place that the debt Bureau is adopting new comment the consumer might be located. For collector knows or should know is 6(b)(1)(ii)–1 to explain that some example, this may arise in a debt inconvenient to the consumer. communication media, such as mailing addresses and landline telephone collector’s initial communication with a Communications or Attempts To numbers, are associated with a place, consumer. One consumer commenter Communicate at Unusual and whereas other communication media, reported continually receiving calls as Inconvenient Places early as 5:00 a.m. (local time at the such as email addresses and mobile consumer’s location) because the debt The Bureau received many comments telephone numbers, are not. Comment collector relied only on the consumer’s discussing the proposed approach to 6(b)(1)(ii)–1 provides that pursuant to telephone number area code, while inconvenient places in response to § 1006.6(b)(1)(ii), a debt collector must ignoring information from the consumer proposed comment 6(b)(1)–1.iii asking not communicate or attempt to that the consumer was in fact in a how, in light of technology such as communicate with a consumer through different time zone. However, once the mobile telephones, which are not media associated with an unusual place, debt collector has information about the affixed to a particular place, a debt or with a place that the debt collector consumer’s location, for example by collector could be sure to avoid knows or should know is inconvenient asking the consumer in an initial contacting a consumer at an to the consumer. Unless the debt communication or being told by the inconvenient place.205 With respect to collector knows that the consumer is at consumer in a subsequent unusual place, one industry commenter an unusual place, or a place that the communication, the debt collector noted that, while the Bureau’s proposal debt collector knows or should know is would no longer have conflicting or provided examples illustrating what inconvenient to the consumer, comment ambiguous information regarding the may be considered ‘‘inconvenient’’ 6(b)(1)(ii)–1 continues, § 1006.6(b)(1)(ii) consumer’s location and would not under the rule, the proposal did not does not prohibit a debt collector from need to rely on the safe harbor provided provide examples illustrating what communicating or attempting to in comment 6(b)(1)(i)–2. would constitute an ‘‘unusual’’ time or communicate with a consumer through As finalized, comment 6(b)(1)(i)–2 place under FDCPA section 805(a)(1). communication media not associated states that, under § 1006.6(b)(1)(i), in the The commenter therefore requested the with the unusual or inconvenient place. absence of a debt collector’s knowledge Bureau clarify what would be The Bureau is also adopting an example of circumstances to the contrary, an considered ‘‘unusual,’’ considering the in new comment 6(b)(1)(ii)–1.i. The inconvenient time for communicating extensive consumer use of mobile Bureau believes this approach addresses with a consumer is before 8:00 a.m. and telephones and the mobile nature of the complexities presented by mobile after 9:00 p.m. local time at the consumers themselves. Another technology, clarifies how debt collectors consumer’s location. If a debt collector may comply with FDCPA section has conflicting or ambiguous 203 15 U.S.C. 1692c(a)(1). 805(a)(1)’s prohibitions on information regarding a consumer’s 204 As discussed in the section-by-section analysis communications with a consumer at of § 1006.6(b), § 1006.6(b)(1)(ii) also interprets location, then, in the absence of FDCPA sections 806 and 808 to prohibit a debt unusual and inconvenient places, and knowledge of circumstances to the collector from attempting to communicate with a maintains the consumer protections contrary, the debt collector complies consumer at a place at which FDCPA section under FDCPA section 805(a)(1). The with § 1006.6(b)(1)(i) if the debt 805(a)(1) prohibits the debt collector from Bureau also reiterates that, in addition communicating with the consumer. collector communicates or attempts to 205 For a discussion of and response to those to an inconvenient place designation communicate with the consumer at a comments, see the section-by-section analysis of under § 1006.6(b)(1)(ii), a consumer may time that would be convenient in all of final comment 6(b)(1)–1.iii above. invoke an inconvenient time

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76767

designation under § 1006.6(b)(1)(i) or a The Bureau received comments information, name, address, telephone medium of communication restriction requesting four specific clarifications. number and, if applicable, email under § 1006.14(h)(1) to further control First, several industry commenters address, in order to confirm the when or whether a debt collector can requested the Bureau define what consumer is in fact represented by an communicate or attempt to constitutes ‘‘a reasonable period of attorney. Similarly, another trade group communicate with the consumer using time’’ by, for example, specifying a commenter suggested the Bureau adopt mobile technology. certain number of days. A number of an approach similar under the laws of Additionally, as the Bureau noted in industry commenters suggested the one State where a notice of attorney the proposal, in response to feedback Bureau adopt 10, 21, or 30 days as a representation must contain certain received during the SBREFA process, reasonable period of time, and some information to be effective,209 and that the Bureau declined to propose an commenters drew parallels to existing the Bureau further require that the intervention under consideration that State debt collection laws. One such notice list the account(s) for which the would have designated four categories industry commenter suggested the attorney is representing the consumer. of places as presumptively Bureau go further and clarify that, upon In response to these comments, the inconvenient.206 Accordingly, this final expiration of a 30-day period, a debt Bureau notes that FDCPA section rule does not designate categories of collector may assume the attorney is not 805(a)(2) requires only that a debt places as presumptively inconvenient. representing the consumer. Two trade collector knows the consumer is The Bureau is also not aware of group commenters suggested that represented by an attorney with respect confusion or concerns regarding places attempts to contact a consumer’s to such debt and has knowledge of, or that are considered unusual under attorney often go unanswered by the can readily ascertain, such attorney’s FDCPA section 805(a)(1). This final rule attorney to create an FDCPA violation. name and address. This statutory therefore implements the statutory One consumer advocate suggested provision does not require any further language ‘‘at any unusual time or place’’ that the reasonable period of time action on behalf of either the as part of final § 1006.6(b)(1) consistent depends on the circumstances and on consumer’s attorney or the consumer to with the statute and without further whether the communication from the confirm the representation and trigger commentary or interpretation. To debt collector is the type of the statutory protections afforded, address commenter concerns, however, communication that requires a response namely that the debt collector may not the Bureau is adding new comment from the consumer’s attorney, such as a communicate with the consumer in 6(b)(1)(ii)–1 as discussed above to settlement offer or a request for connection with the collection of any clarify how a debt collector may clarification pursuant to a verification debt. The Bureau therefore declines to communicate through media that rely request. However, the commenter adopt the commenters’ suggested on mobile technology when a consumer suggested that, for debt collection approaches. Third, some industry commenters may be at an unusual or inconvenient communications seeking simply to requested that the Bureau clarify the place. persuade the consumer to pay the alleged debt, the attorney would not be effect of a consumer-initiated 6(b)(2) Prohibitions Regarding obliged to respond and therefore no communication once the debt collector Consumer Represented by an Attorney corresponding reasonable time exists. knows the consumer is represented by FDCPA section 805(a)(2) prohibits a The Bureau declines to adopt a an attorney. One such commenter stated debt collector from communicating with specific time period under that, under such circumstances, the debt a consumer in connection with the § 1006.6(b)(2). As explained in the collector should be permitted to answer collection of any debt if the debt section-by-section analysis of § 1006.10, the consumer’s questions and return the collector knows the consumer is the Bureau concludes that consumer’s telephone call for the sole reasonableness generally depends upon purpose of responding to that consumer- represented by an attorney with respect the facts and circumstances surrounding initiated communication and to also to the debt and has knowledge of, or can a debt collector’s communications with clarify whether the consumer is still readily ascertain, the attorney’s name a consumer’s attorney. Accordingly, the represented by counsel. One industry and address, unless the attorney fails to Bureau declines to specify a period of commenter requested the Bureau clarify respond within a reasonable period of time in which a consumer’s attorney that a consumer can inform a debt time to a communication from the debt must respond before a debt collector is collector that the consumer is no longer collector or unless the attorney consents permitted to communicate or attempt to being represented by an attorney, while to direct communication with the communicate with a consumer. another industry commenter suggested consumer.207 The Bureau proposed Second, some trade group that the debt collector must await a § 1006.6(b)(2) to implement this commenters suggested the Bureau adopt response from the attorney before prohibition and generally restate the a requirement that the consumer’s 208 communicating with the consumer. statute. For the reasons discussed attorney, the consumer, or both, The introductory paragraph of FDCPA below, the Bureau is finalizing undertake specific steps to confirm the section 805(a) contains exceptions for § 1006.6(b)(2) as proposed, with minor attorney’s representation of the the prior consent of the consumer given revisions and with one clarification in consumer. These suggestions included directly to the debt collector and the response to comments, as discussed that the consumer’s attorney respond to express permission of a court of below. a debt collector’s request for competent jurisdiction, which are confirmation of representation, with one implemented by the Bureau in 206 84 FR 23274, 23297 n.211 (May 21, 2019). trade group commenter specifying that § 1006.6(b)(4) and further discussed in 207 15 U.S.C. 1692c(a)(2). 208 84 FR 23274, 23297 (May 21, 2019). As the attorney’s response must be between that section’s analysis below. In discussed in the section-by-section analysis of five and seven days of the request and addition to the exceptions specific to § 1006.6(b), § 1006.6(b)(2) also interprets FDCPA that the attorney must enter an FDCPA section 805(a)(2) (e.g., unless the sections 806 and 808 to prohibit a debt collector appearance on behalf of the consumer. attorney fails to respond within a from attempting to communicate with a consumer who is represented by an attorney if FDCPA section Additionally, this commenter suggested reasonable period of time to a 805(a)(2) prohibits the debt collector from the consumer also be required to communicating with that consumer. provide the attorney’s full contact 209 See W. Va. Code 46A–2–128(e).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76768 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

communication from the debt collector closely mirror the statutory language the workplace and employers. Other or unless the attorney consents to direct and clarify that the protections under consumer commenters particularly communication with the consumer), the FDCPA section 805(a)(2) apply ‘‘with objected to debt collectors calling and general exceptions contained in FDCPA respect to such debt.’’ leaving messages with employers as section 805(b) also function as For the reasons discussed above, the placing undue pressure on employees exceptions to FDCPA section 805(a)(2). Bureau is finalizing § 1006.6(b)(2) as because of the risk of being penalized by Therefore, under the FDCPA, a proposed, with one revision to clarify the employer.213 consumer’s prior consent given directly that § 1006.6(b)(2) applies per debt. Consistent with these consumer to a debt collector permits a debt Accordingly, § 1006.6(b)(2) states that, comments, many consumer advocate collector to communicate with a except as provided in § 1006.6(b)(4), a commenters requested that the Bureau consumer that the debt collector knows debt collector must not communicate or ban debt collectors from communicating is represented by an attorney. attempt to communicate with a or attempting to communicate with Accordingly, the Bureau is adopting consumer in connection with the consumers at the workplace altogether. new comment 6(b)(2)–1 to clarify that a collection of any debt if the debt Alternatively, they recommended that consumer-initiated communication from collector knows the consumer is the Bureau prohibit debt collectors from a represented consumer constitutes the represented by an attorney with respect calling or leaving messages with consumer’s prior consent to that to such debt and knows, or can readily employers at the workplace. One group communication under § 1006.6(b)(4)(i), ascertain, the attorney’s name and of consumer advocates requested that and that therefore the debt collector may address, unless the attorney: (i) Fails to the Bureau clarify that, under FDCPA respond to that consumer-initiated respond within a reasonable period of section 805(a)(3) and § 1006.6(b)(3), a communication. A debt collector is not time to a communication from the debt debt collector knows or has reason to prohibited from inquiring in that collector; or (ii) consents to the debt know that an employer prohibits a response whether the consumer is still collector’s direct communication with consumer from receiving represented by an attorney; however, as the consumer. communications in connection with the comment 6(b)(2)–1 explains, the collection of any debt at the workplace consumer’s act of initiating a 6(b)(3) Prohibitions Regarding if the consumer asks the debt collector communication does not negate the debt Consumer’s Place of Employment not to contact the consumer at work. collector’s knowledge that the consumer FDCPA section 805(a)(3) prohibits a And a group of State Attorneys General is represented by an attorney and does debt collector from communicating with recommended that the Bureau prohibit not revoke the protections afforded the a consumer in connection with the a debt collector from calling a consumer under § 1006.6(b)(2). collection of any debt at the consumer’s consumer’s place of employment if the Comment 6(b)(2)–1 further provides that place of employment if the debt debt collector reliably learns, in any after the debt collector’s response, the collector knows or has reason to know way, that the consumer’s employer debt collector must not communicate or that the consumer’s employer prohibits prohibits debt collection calls. attempt to communicate further with the consumer from receiving such A number of industry commenters the consumer unless the debt collector communication.211 The Bureau agreed that a debt collector should be knows the consumer is not represented proposed § 1006.6(b)(3) to implement expected to honor a consumer’s request by an attorney with respect to the debt, this prohibition and generally restate to stop contacting the consumer at the either based on information from the the statute.212 For the reasons discussed workplace, while generally requesting consumer or the consumer’s attorney, or below, the Bureau is finalizing that the Bureau further clarify when a an exception under § 1006.6(b)(2)(i) or § 1006.6(b)(3) as proposed. debt collector knows or has reason to (ii) or § 1006.6(b)(4) applies. Many consumers commented on the know that a consumer’s employer Fourth, one industry commenter disruptive effects of debt collection calls prohibits the consumer from receiving requested that the Bureau clarify to the workplace. Many commenters debt collection communications at the whether a debt collector should assume described these calls as harassing and workplace. Many industry commenters that, if an attorney represents a disruptive, while many more consumers suggested that a debt collector should consumer with respect to one debt, the stated that frequent debt collection calls not be responsible for having to attorney represents the consumer with to the workplace have threatened their proactively track and record, for all respect to future debts; in particular, the employment or led to them being fired, present and future consumers, which commenter expressed concern about thus making repayment of the allegedly employers do or do not prohibit such privacy and medical debts. FDCPA owed debt more unlikely. Some communications, and that such a section 805(a)(2) states in relevant part consumer and consumer advocate requirement for debt collectors to cross- that ‘‘if the debt collector knows the commenters explained that these calls reference their files would be consumer is represented by an attorney are an unwelcome distraction that could unreasonable. One industry commenter 210 with respect to such debt.’’ The jeopardize a consumer’s ability to pay explained that a communication from Bureau interprets the protections the debt and that interrupt the work not one consumer suggesting that the afforded a consumer under FDCPA only of the consumer who allegedly employer prohibits communication at work does not necessarily apply to all section 805(a)(2) to apply to a particular owes the debt, but of others, including employees, as certain managers or debt allegedly owed by the consumer, co-workers who may be responsible for supervisors may restrict such calls but not to future or other debts allegedly answering incoming telephone calls to owed by the consumer, unless the debt while the employer, as a matter of policy, may not. Accordingly, one collector knows that an attorney 211 15 U.S.C. 1692c(a)(3). represents the consumer with respect to 212 84 FR 23274, 23297 (May 21, 2019). As industry commenter requested the those debts and has knowledge of, or discussed in the section-by-section analysis of can readily ascertain, the attorney’s § 1006.6(b), § 1006.6(b)(3) also interprets FDCPA 213 As explained in the section-by-section name and address. Accordingly, the sections 806 and 808 to prohibit a debt collector analysis of final § 1006.2(j), the definition of from attempting to communicate with a consumer limited-content message adopted under this final Bureau revises § 1006.6(b)(2) to more at the consumer’s place of employment if FDCPA rule does not include third-party limited-content section 805(a)(3) prohibits the debt collector from messages, either in live conversations or as 210 15 U.S.C. 1692c(a)(2). communicating with the consumer there. voicemail messages knowingly left for a third party.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76769

Bureau to clarify that an instruction In addition, consistent with the In response to those commenters from a consumer or employer to a debt Bureau’s interpretation regarding a suggesting that a debt collector would collector to cease contacting a consumer consumer’s designation of a time or be required to track which employers through an employer-provided email place as inconvenient, as explained prohibit their employees from receiving address or telephone number is effective above,215 the Bureau concludes that a debt collection communications at the only as to that specific consumer and consumer need not undertake specific workplace, this final rule imposes no would not be imputed to the entirety of actions or utter specific words to be such requirement. The Bureau is the employer’s workforce. afforded the statutory protections adopting § 1006.6(b)(3) to implement Recognizing that a debt collection provided under FDCPA section the prohibition contained in FDCPA communication may cause problems for 805(a)(3). The statute does not prescribe section 805(a)(3) and to restate the a consumer in the workplace, two any specific actions or require precise statute. industry commenters suggested that it responses or utterances on behalf of the The Bureau also requested comment would be reasonable to require a consumer to invoke the workplace on whether additional clarification consumer to use specific language to put communications protections, and nor would be useful with respect to a debt a debt collector on notice. One industry does this final rule impose such collector’s communications or attempts commenter explained that, because requirements. Even if a consumer does to communicate with a consumer while FDCPA section 805(a)(3)’s knowledge not precisely state that the employer at work, for example, on a consumer’s standard is difficult to fulfill, all a prohibits the consumer from receiving personal mobile telephone or portable consumer needs to do is give notice to debt collection communications at the electronic device. One consumer a debt collector that the consumer does workplace, the debt collector commented that, because many people not want telephone calls or email nevertheless may know or have reason use their mobile telephones for work messages at a physical place of work or to know, based on the facts and and personal use, it would be extremely on a physical telephone owned and circumstances, that the employer disruptive for a debt collector to send managed by the company. prohibits such communications. text messages during work hours while In addition to the unusual and Accordingly, the Bureau is finalizing a consumer is using that mobile inconvenient time and place protections revised comment 6(b)(3)–1 to provide telephone for work purposes. Another delineated under FDCPA section that a debt collector knows or has consumer commented that the Bureau 805(a)(1), Congress separately provided reason to know that a consumer’s should clarify under § 1006.6(b)(3) that consumers with the workplace employer prohibits the consumer from communications at the workplace protections afforded under FDCPA receiving such communication if, for include communications through a section 805(a)(3). Accordingly, the example, the consumer tells the debt device or channel owned by an Bureau implements this prohibition and collector that the consumer cannot take employer and through a personal device generally restates the statute in final personal calls at work. The debt during a consumer’s known work hours. § 1006.6(b)(3). This provision states that, collector may ask follow-up questions A consumer advocate that suggested the except as provided in § 1006.6(b)(4), a regarding the employer’s prohibitions or Bureau adopt a bright-line rule against debt collector must not communicate or limitations on contacting the consumer all debt collection communications attempt to communicate with a at the place of employment to clarify through any medium with a consumer consumer in connection with the statements by the consumer.216 at the workplace also suggested that collection of any debt at the consumer’s Once the debt collector knows or has such a rule should extend to the use of place of employment, if the debt reason to know of this limitation, the mobile telephones, as long as the debt collector knows or has reason to know debt collector is prohibited from collector knows or has reason to know that the consumer’s employer prohibits communicating or attempting to that the consumer is at work. The the consumer from receiving such communicate with the consumer at the commenter explained that the debt communication. workplace by, for example, by mailing collector may ask the consumer to As described by many consumer a letter to the consumer’s workplace inform the debt collector which hours commenters, the Bureau recognizes the address or calling the consumer’s work the consumer is at work so the debt unique consumer harm presented by landline. collector may avoid those times, and if debt collection communications at a the consumer states specific hours and times, the debt collector must respect consumer’s place of employment, collectors from communicating or attempting to those instructions. A group of consumer including possible or actual termination communicate using an email address that the debt collector knows is provided by the consumer’s advocates suggested that the prohibition of employment. Although some employer. See the section-by-section analysis of under proposed § 1006.6(b)(3) should consumer group commenters requested § 1006.22(f)(3). For clarity, the Bureau is finalizing also prohibit a debt collector from that the Bureau ban all workplace comment 6(b)(3)–2 to cross-reference this directing communications, including by telephone calls or all workplace prohibition regarding employer-provided email addresses. voice or text message, to any personal communications generally, the Bureau 215 See the section-by-section analysis of mobile device during any known declines to do so because FDCPA § 1006.6(b)(1). working hours. One local government section 805(a)(3) prohibits a debt 216 The Bureau nevertheless notes that a debt commenter suggested that, consistent collector from communicating with a collector who does not know or have reason to with proposed § 1006.22(f)(3), a debt consumer at the consumer’s place of know that the consumer’s employer prohibits the consumer from receiving such communication and collector should not be permitted to employment only if the debt collector who elects to communicate or attempt to send mail to a consumer’s place of knows or has reason to know that the communicate with a consumer in connection with employment or call, text, or leave the collection of any debt at the consumer’s place consumer’s employer prohibits the voicemails on a consumer’s work consumer from receiving such of employment should carefully manage any such 214 communications or attempts so as to not risk a telephone without the consumer’s prior communication. third-party disclosure as prohibited under FDCPA consent. section 805(b) and implemented under final Industry commenters generally 214 Recognizing that the risk of third-party § 1006.6(d). For additional discussion of prohibited disclosure is particularly high for communications third-party communications and exceptions, requested clarity regarding debt sent to employer-provided email addresses, the respectively, see the section-by-section analysis of collection communications with a Bureau is finalizing § 1006.22(f)(3) to prohibit debt § 1006.d(1) and (2). consumer to a personal mobile

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76770 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

telephone or device while the consumer approach in comment 6(b)(1)(ii)–1, a and communications at the consumer’s is at work. One industry commenter debt collector must not communicate or place of employment. For the reasons suggested that, because it is within the attempt to communicate with a discussed below, the Bureau is consumer’s discretion whether to consumer through media associated finalizing § 1006.6(b)(4)(i) as proposed. answer the call, telephone calls to a with the consumer’s place of A group of consumer advocates consumer’s personal mobile telephone employment if, pursuant to supported the Bureau’s proposed number should not be considered a § 1006.6(b)(3), the debt collector knows interpretation of FDCPA section 805(a) communication at the consumer’s place or has reason to know that the to require that a consumer’s prior of employment. One trade group consumer’s employer prohibits the consent must be given during a commenter suggested that the Bureau consumer from receiving such communication that would not violate adopt a safe harbor to exempt from communication. For other proposed § 1006.6(b)(1) through (3) as liability, absent a consumer’s communication media not associated an important additional protection for designation of a specified time as with the consumer’s place of consumers. inconvenient or medium of employment, such as a personal email The Bureau is adopting its communication restriction, a debt address or personal mobile telephone interpretation of FDCPA section 805(a) collector who unknowingly reaches a number, § 1006.6(b)(3) does not prohibit to require that the consumer’s prior consumer at the place of employment if a debt collector from communicating or consent must be given during a attempting to communicate with the attempting to communicate with a communication that would not violate consumer through a mobile telephone or consumer through such media unless § 1006.6(b)(1) through (3). For example, other permissible communication the debt collector knows that the ordinarily a debt collector could not media, for example, an email message to consumer is at the place of employment. place a telephone call to a consumer at the consumer’s personal email account. Therefore, absent information regarding midnight and obtain the consumer’s Alternatively, one trade group when the consumer is at the place of prior consent for future debt collection commenter suggested that a consumer employment or other communication communications at that time. The may prefer to communicate privately restriction,219 the debt collector does Bureau interprets a consumer’s prior during work hours through a personal not violate § 1006.6(b)(3) by placing a consent to be consent obtained in the device instead of during non-work telephone call or sending an electronic absence of conduct that would hours when the consumer may prefer to communication to the consumer’s compromise or eliminate a consumer’s focus on family or other pursuits. personal mobile telephone number or ability to freely choose whether to As discussed above with respect to portable electronic device, even if the consent. A communication that would unusual and inconvenient places under consumer receives or views the violate § 1006.6(b)(1) through (3) (e.g., FDCPA section 805(a)(1) and final communication while at the place of consent obtained from a consumer at an comment 6(b)(1)(ii)–1,217 the Bureau employment. unusual or inconvenient time or place) similarly recognizes here the is likely to compromise or eliminate a 6(b)(4) Exceptions complexities presented by mobile consumer’s ability to freely choose technology while debt collectors aim to FDCPA section 805(a) provides whether to consent. By prohibiting prior comply with the statutory requirement certain exceptions to its limitations on consent purported to be obtained during under FDCPA section 805(a)(3) that a a debt collector’s communications with a communication that would violate debt collector not communicate with a a consumer. The Bureau proposed § 1006.6(b)(1) through (3), the Bureau consumer at the consumer’s place of § 1006.6(b)(4) to implement and does not intend to suggest that prior employment if the debt collector knows interpret the exceptions in FDCPA consent obtained in other unlawful or has reason to know that the section 805(a).220 For the reasons ways would comply with FDCPA consumer’s employer prohibits the discussed below, the Bureau is section 805(a). Accordingly, the Bureau consumer from receiving such finalizing § 1006.6(b)(4) as proposed. is adopting § 1006.6(b)(4)(i) as proposed to provide that the prohibitions in communication. 6(b)(4)(i) Final comment 6(b)(3)–1, discussed § 1006.6(b)(1) through (3) do not apply above, provides that a debt collector The Bureau proposed § 1006.6(b)(4)(i) when a debt collector communicates or may ask follow-up questions regarding to implement the introductory language attempts to communicate with a the employer’s prohibitions or in FDCPA section 805(a) that, in consumer in connection with the limitations on contacting the consumer relevant part, sets forth the exception for collection of any debt with the prior at the place of employment to clarify the prior consent of the consumer given consent of the consumer, given directly statements by the consumer. For directly to the debt collector. Proposed to the debt collector during a example, a debt collector may ask a § 1006.6(b)(4)(i) generally mirrored the communication that does not violate consumer to identify times when the statute, except that proposed § 1006.6(b)(1) through (3). consumer is at the place of employment. § 1006.6(b)(4)(i) interpreted FDCPA The Bureau also proposed comment As explained in the section-by-section section 805(a) to require that the 6(b)(4)(i)–1 to clarify the meaning of analysis of § 1006.6(b)(1)(ii), some consumer’s prior consent must be given prior consent. Proposed comment during a communication that would not communication media are associated 6(b)(4)(i)–1 explained that, if a debt violate proposed § 1006.6(b)(1) through with a place.218 At the consumer’s place collector learns during a communication (3), i.e., the prohibitions on of employment, such media may that the debt collector is communicating communications with a consumer at include, for example, mail to the with a consumer at an inconvenient unusual or inconvenient times or consumer’s place of employment and time or place, the debt collector cannot places, communications with a calls to the consumer’s work landline or during that communication ask the consumer represented by an attorney, employer-provided mobile telephone consumer to consent to the continuation number. Consistent with the Bureau’s of that debt collection communication. 219 Such a restriction could include, for example, The Bureau proposed this comment as an inconvenient time designation under 217 See the section-by-section analysis of § 1006.6(b)(1)(i) or a medium of communication an interpretation of the language in § 1006.6(b)(1)(ii). restriction under § 1006.14(h)(1). FDCPA section 805(a) that consent must 218 See id. 220 84 FR 23274, 23297–98 (May 21, 2019). be ‘‘prior’’ and therefore given in

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76771

advance of a communication that consent to the continuation of that and is finalizing it as proposed. otherwise would violate proposed inconvenient communication. Accordingly, final § 1006.6(b)(4)(ii) § 1006.6(b)(1) through (3). For the Additionally, consistent with the provides that the prohibitions in reasons stated below, the Bureau is introductory language in FDCPA section § 1006.6(b)(1) through (3) do not apply finalizing comment 6(b)(4)(i)–1 largely 805(a), the Bureau proposed comment when a debt collector communicates or as proposed, with minor revisions. 6(b)(4)(i)–2 to restate the rule that the attempts to communicate with a One industry commenter opposed this prior consent of the consumer must be consumer in connection with the proposed interpretation on the basis that given directly to the debt collector, and collection of any debt with the express it takes away a consumer’s ability to to explain that a debt collector cannot permission of a court of competent freely choose to continue the rely on the prior consent of the jurisdiction. communication and requested that the consumer given to the original creditor Bureau instead prohibit a debt collector or to a previous debt collector. The 6(c) Communications With a from continuing or forcing the consumer Bureau proposed this comment to Consumer—After Refusal To Pay or to communicate if the time or place is implement the statutory requirement in Cease Communication Notice considered inconvenient. Another FDCPA section 805(a) that the prior FDCPA section 805(c) provides that, industry commenter requested that the consent of the consumer be given subject to certain exceptions, if a Bureau clarify whether a debt collector directly to the debt collector. For the consumer notifies a debt collector in could ask the consumer whether the reasons discussed below, the Bureau is writing that the consumer refuses to pay time or communication medium is finalizing comment 6(b)(4)(i)–2 largely a debt or that the consumer wishes the inconvenient, and if so, whether the as proposed. debt collector to cease further consumer prefers another time or A consumer commenter supported the communication with the consumer, the communication medium. proposal and stated that prior consent The Bureau is finalizing comment should not be transferred along with an debt collector shall not communicate further with the consumer with respect 6(b)(4)(i)–1 largely as proposed, with account, while one trade group 222 minor revisions. The Bureau is adopting commenter suggested that consumer to such debt. The Bureau proposed its proposed interpretation that prior consent given to the creditor should be § 1006.6(c) to implement and interpret consent must be given in advance of a passed to a debt collector hired by that FDCPA section 805(c) and pursuant to communication that otherwise would creditor. the Bureau’s authority under FDCPA violate § 1006.6(b)(1) through (3), The Bureau is adopting comment section 814(d) to prescribe rules with because consent that satisfies FDCPA 6(b)(4)(i)–2 as proposed, with minor respect to the collection of debts by debt section 805(a) must be ‘‘prior.’’ revisions. A debt collector cannot rely collectors. For the reasons discussed Additionally, permitting a debt collector on the prior consent of the consumer below, the Bureau is finalizing to ask a consumer to consent to a given to a creditor or to a previous debt § 1006.6(c) largely as proposed. communication once the debt collector collector because such prior consent is 6(c)(1) Prohibition knows or should know the not given ‘‘directly’’ to the debt communication is occurring, for collector, as FDCPA section 805(a) The Bureau proposed § 1006.6(c)(1) to example, at an inconvenient time or expressly requires. This interpretation is implement FDCPA section 805(c)’s place, would undermine the very also consistent with the FDCPA’s cease communication provision and protection guaranteed to the consumer legislative history.221 Accordingly, generally restate the statute, with only under FDCPA section 805(a)(1). comment 6(b)(4)(i)–2 states that minor changes for clarity. Proposed Therefore, final comment 6(b)(4)(i)–1 § 1006.6(b)(4)(i) requires the prior § 1006.6(c)(1) stated that, except as clarifies that the debt collector would be consent of the consumer to be given provided in proposed § 1006.6(c)(2), a prohibited from asking the consumer to directly to the debt collector. For debt collector must not communicate or consent to the continuation of that example, a debt collector cannot rely on attempt to communicate further with a inconvenient communication. The the prior consent of the consumer given consumer with respect to a debt if the comment clarifies, however, that a debt to a creditor or to a previous debt consumer notifies the debt collector in collector may ask the consumer during collector. writing that: (i) The consumer refuses to that communication what time or place 6(b)(4)(ii) pay the debt; or (ii) the consumer wants would be convenient. Accordingly, final the debt collector to cease further comment 6(b)(4)(i)–1 states that The Bureau proposed communication with the consumer.223 § 1006.6(b)(4)(i) provides, in part, that § 1006.6(b)(4)(ii) to implement the For the reasons discussed below, the the prohibitions in § 1006.6(b)(1) introductory language in FDCPA section Bureau is finalizing § 1006.6(c)(1) through (3) on a debt collector 805(a) that, in relevant part, sets forth largely as proposed, with non- communicating or attempting to the exception for the express permission of a court of competent jurisdiction. As communicate with a consumer in 222 15 U.S.C. 1692c(c). For ease of reference, connection with the collection of any proposed, § 1006.6(b)(4)(ii) generally through this section-by-section analysis, the Bureau debt do not apply if the debt collector restated the statute, with only minor refers to this as the FDCPA’s ‘‘cease communicates or attempts to wording and organizational changes for communication’’ provision, and to a consumer’s clarity. The Bureau received no notification that the consumer refuses to pay a debt communicate with the prior consent of or wishes the debt collector to cease further the consumer. If the debt collector comments on proposed § 1006.6(b)(4)(ii) communication with the consumer as a consumer’s learns during a communication that the ‘‘cease communication request.’’ debt collector is communicating with 221 See H. Rep. No. 95–131, at 5 (1977) (‘‘The 223 84 FR 23274, 23298 (May 21, 2019). For the committee intends that in section [805] the ‘prior same reasons that § 1006.6(b) prohibits debt the consumer at an inconvenient time or consent’ be meaningful, i.e., that any prior consent collectors from attempting to communicate with place, for example, the debt collector by a consumer is to be a voluntary consent and consumers if FDCPA section 805(a) prohibits may ask the consumer during that shall be expressed by the consumer directly to the communications with consumers, § 1006.6(c) communication what time or place debt collector. Consequently, the committee intends interprets FDCPA sections 806 and 808 to prohibit that any term in a contract which requires a a debt collector from attempting to communicate would be convenient. However, consumer to consent in advance to debt collection with a consumer if FDCPA section 805(c) prohibits § 1006.6(b)(4)(i) prohibits the debt communication would not constitute ‘prior consent’ the debt collector from communicating with the collector from asking the consumer to by such consumer.’’). consumer.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76772 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

substantive revisions to more closely refuses to pay a debt or wishes the debt commercially impractical for debt mirror the statutory language. collector to cease further collectors to update their records and Many consumers commented that a communication with the consumer as comply with a consumer’s cease debt collector should be required to required under § 1006.6(c)(1), the communication request in real time. obey a consumer’s oral request that the consumer’s oral request that the debt One industry commenter suggested that, debt collector stop calling. Consistent collector ‘‘stop calling,’’ for example, for notification by letter, email, or text with these consumer comments, one would constitute a request that the debt message, a timeframe of 72 hours from commenter that represents consumers collector not use that medium of the next business day that the cited a survey by a consumer advocate communication (e.g., telephone calls) to notification was received should be suggesting that the majority of communicate with the consumer, and, given, while another industry consumers that asked a debt collector to consistent with § 1006.14(h)(1), the debt commenter suggested three business stop calling were subsequently collector would thereafter be prohibited days from the date of receipt. Similarly, contacted by the debt collector. This from placing telephone calls to the one trade group commenter suggested commenter also suggested that the consumer. that a debt collector is deemed to have Bureau should require debt collectors to The Bureau proposed comment notice three days after receipt of the obey consumers’ oral requests to stop 6(c)(1)–1 to implement FDCPA section request. One trade group commenter calling. 805(c)’s provision that, if the suggested that, because electronic A group of consumer advocates consumer’s cease communication communications may be filtered and generally agreed that a debt collector request is made by mail, the notification quarantined before actually being should be required to stop contacting a is complete upon receipt by the debt released into the debt collector’s virtual consumer upon the consumer’s oral collector.225 The Bureau proposed to environment, a certain amount of time, request at any time. Other groups of apply this standard to all written or for example, a three-to-five-day grace consumer advocates requested that the electronic forms of a consumer’s cease period, should be afforded a debt Bureau clarify that ‘‘stop calling’’ communication request. Proposed collector to ‘‘receive’’ the electronic requests can be made orally and should comment 6(c)(1)–1 thus provided that if, cease communication request and apply to all calls from a debt collector, pursuant to § 1006.6(c)(1), a consumer update its internal reporting systems to unless a consumer asks to stop calls to notifies a debt collector in writing or reflect it. Two industry commenters one telephone number only. Some electronically using a medium of suggested that debt collectors should be consumer advocates suggested that a electronic communication through required to send an acknowledgement consumer’s oral request that the debt which a debt collector accepts and acceptance correspondence to the collector simply ‘‘stop calling’’ or a text electronic communications from consumer within five days of receipt of message to the debt collector to ‘‘stop’’ consumers that the consumer either a cease communication request. Another should require the debt collector to refuses to pay a debt or wants the debt industry commenter suggested that, discontinue contact with the consumer. collector to cease further consistent with the CAN–SPAM Act of One consumer advocate explained that, communication with the consumer, 2003,227 the Bureau should adopt a ten- particularly for vulnerable consumers notification is complete upon the debt business day safe harbor given debt who may have limited literacy or collector’s receipt of that information.226 collectors’ legitimate business and language proficiency, making a request The Bureau requested comment on operational reasons. One industry in writing can be burdensome. whether a debt collector should be commenter suggested that cease FDCPA section 805(c) states that, if a afforded a certain period of time to communication requests should be consumer notifies a debt collector in update its systems to reflect a treated as received upon processing, as writing that the consumer refuses to pay consumer’s cease communication long as the debt collector has reasonable a debt or that the consumer wishes the request even after the notification is procedures for processing them. debt collector to cease further received, and, if so, how long. One The Bureau recognizes that any communication with the consumer, the academic commenter opposed, without maximum period of time afforded a debt debt collector shall not communicate explanation, the creation of any grace collector to update its systems to reflect further with the consumer with respect period for a debt collector to update a cease communication request must be to such debt unless certain exceptions records when a consumer sends a cease short enough to protect consumers from apply. Because the writing requirement communication request. unwanted communications, but long proposed in § 1006.6(c)(1) was intended Industry commenters generally enough for compliance to be practical. to implement the language in FDCPA supported affording a debt collector a Given the disparate periods of time section 805(c) that a consumer notify a certain period of time to update its suggested by commenters and the systems to reflect a consumer’s cease debt collector in writing, the Bureau is different methods by which a written or communication request, though they finalizing it as proposed. electronic cease communication request As part of this final rule, however, the differed in their specific may be made by a consumer, this final Bureau also is finalizing § 1006.14(h)(1), recommendations. One trade group rule does not specify the period of time which prohibits a debt collector from commenter suggested no less than two afforded a debt collector to update its communicating or attempting to business days, because the immediacy systems to reflect a cease communicate with a person through a of electronic communications makes it communication request. However, depending upon the circumstances, medium of communication if the person 225 has requested that the debt collector not 15 U.S.C. 1692c(c). FDCPA section 813(c)’s bona fide error 226 The Bureau proposed this clarification on the defense to civil liability may apply if, use that medium to communicate with basis that FDCPA section 805(c) does not state that the person.224 Therefore, even if a only mail notifications are complete upon receipt, notwithstanding the maintenance of consumer does not notify a debt but rather leaves ambiguous when other forms of procedures reasonably adapted to avoid collector in writing that the consumer notification are complete and, regardless of the any such error, a debt collector medium, it may not be reasonable to consider a debt communicates or attempts to collector to have been notified before the debt 224 This prohibition and its exceptions are collector has received a consumer’s cease communicate with a consumer after explained in detail in the section-by-section communication request. 84 FR 23274, 23298 (May analysis of § 1006.14(h). 21, 2019). 227 15 U.S.C. 7701 et seq.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76773

receiving, but before processing, a cease as entirely consistent with the E–SIGN satisfied when a consumer makes a communication request. For example, if Act and stated that the Bureau’s cease communication request using a a debt collector who schedules an email interpretation will make it easier for medium of electronic communication message to be sent to a consumer consumers to access the protections of through which a debt collector accepts subsequently receives a cease § 1006.6(c). One local government electronic communications from communication request by email but commenter supported the Bureau’s consumers, such as email messages or a sends the previously scheduled email proposal to interpret the writing website portal.233 Thus, consistent with message to the consumer before the requirement in FDCPA section 805(c) to the Bureau’s interpretation of the E– request can be processed include email messages but expressed SIGN Act, pursuant to § 1006.6(c)(1), a (notwithstanding the maintenance of concern with the proposed approach debt collector is required to give legal procedures to avoid such an error), the that a debt collector would be required effect to a consumer’s electronic cease debt collector may be entitled to a bona to give legal effect to a consumer’s communication request if the debt fide error defense to civil liability under notification submitted electronically collector generally accepts electronic FDCPA section 813(c).228 only if the debt collector generally chose communications from consumers. The For the reasons discussed above, the to accept electronic communications Bureau adopts this interpretation to Bureau is finalizing comment 6(c)(1)–1 from consumers. The commenter harmonize FDCPA section 805(c)’s as proposed, and including a new suggested that the Bureau require a debt writing requirement with the E–SIGN example in comment 6(c)(1)–1.i to collector to accept email Act. Additionally, because the illustrate a consumer’s cease communications from a consumer consumer may only use a medium of communication request made by mail regarding communication preferences. electronic communication through being complete upon receipt by a debt Another local government commenter which a debt collector accepts collector. requested that the Bureau mandate that electronic communications from The Bureau proposed comment consumers be permitted to make cease consumers, section 101(b) of the E– 6(c)(1)–2 to codify its interpretation of communication requests using any SIGN Act is not contravened. the E–SIGN Act enabling a consumer to communication medium that the debt One trade group commenter suggested satisfy, through an electronic request, collector either has used to that the Bureau permit a debt collector FDCPA section 805(c)’s requirement communicate with the consumer or has to require a consumer to send an that the consumer’s notification be in invited the consumer to use to electronic cease communication request writing. The Bureau proposed to communicate with the debt collector. only to portals and email addresses interpret the applicability of the E–SIGN This commenter stated that a cease designated by the debt collector. A Act to a consumer electronically communication request submitted by group of consumer advocates requested notifying a debt collector that the email, text message, or through a debt the Bureau to clarify that a debt consumer refuses to pay a debt or wants collector’s website should be treated as collector should be deemed to accept the debt collector to cease further a written communication for purposes electronic cease communication communication with the consumer.229 of § 1006.6(c)(1). requests from consumers through any For the reasons stated below, the Bureau The E–SIGN Act could affect whether non-public-facing medium listed on the is finalizing comment 6(c)(1)–2 as a consumer satisfies the requirement in debt collector’s website or listed in any proposed. FDCPA section 805(c) that a cease of the debt collector’s outgoing A group of consumer advocates communication request be ‘‘in writing.’’ communications to consumers. supported proposed comment 6(c)(1)–2 Section 101(a)(1) of the E–SIGN Act Nothing in § 1006.6(c)(1) prohibits a generally provides that a record relating debt collector from requesting a 228 A number of courts have considered a debt to a transaction in or affecting interstate consumer to send an electronic cease collector’s assertion of a bona fide error defense or foreign commerce may not be denied communication request through online under such circumstances. See, e.g., Webster v. ACB legal effect, validity, or enforceability portals or to email addresses designated Receivables Mgmt., Inc., 15 F. Supp. 3d 619, 629 (D. 230 by the debt collector. As debt collectors Md. 2014) (holding debt collector not entitled to solely because it is in electronic form. bona fide error defense where employees’ However, section 101(b)(2) of the E– likely already do for cease communications with consumer after cease SIGN Act does not require any person communication requests received by communication notification constituted good-faith to agree to use or accept electronic mail, debt collectors should maintain human errors, but where debt collector failed to procedures reasonably adapted to avoid present any evidence of redundancy or safeguards records or electronic signatures, other in its policies and procedures to prevent such than a governmental agency with any errors in receiving such requests human errors); Smith v. Transworld Sys., Inc., 953 respect to a record other than a contract electronically. The final rule’s F.2d 1025, 1036 (6th Cir. 1992) (holding debt to which it is a party.231 Section prohibitions on harassing, deceptive, collector’s letter mailed shortly after receiving and unfair practices in §§ 1006.14, consumer’s cease communication notification 104(b)(1)(A) of the E–SIGN Act provides constituted bona fide error given debt collector’s authority for a Federal agency with 1006.18, and 1006.22 may address many procedures, including a five-page instruction rulemaking authority under a statute to of the harms that commenters may have manual describing collection procedures, were interpret by regulation the application been concerned with, such as a debt reasonably adapted to avoid any such error); collector intentionally ignoring a Carrigan v. Cent. Adjustment Bureau, Inc., 494 F. of E–SIGN Act section 101 to that 232 Supp. 824, 827 (N.D. Ga. 1980) (assuming debt statute. consumer’s cease communication collector’s violation of FDCPA section 805(c) was The Bureau interprets the request received through an online unintentional, denying debt collector bona fide applicability of the E–SIGN Act as it portal or to an email address not error defense where debt collector failed to provide relates to FDCPA section 805(c)’s designated by the debt collector for any evidence it maintained proper procedures governing handling mail and where error of being requirement that a cease communication receiving such notifications. unaware of consumer’s cease communication letter request be in writing. Specifically, the led to calling consumer). Bureau interprets FDCPA section 233 This interpretation is responsive to comments 229 Section 104(b)(1)(A) of the E–SIGN Act 805(c)’s writing requirement as being recommending that, if a debt collector makes an provides authority for a Federal regulatory agency electronic means of communication available to with rulemaking authority under a statute to consumers, electronic communications received interpret section 101 of the E–SIGN Act with 230 15 U.S.C. 7001(a)(1). from consumers through that channel should trigger respect to that statute by regulation. 15 U.S.C. 231 15 U.S.C. 7001(b)(2). the debt collector’s obligations under FDCPA 7004(b)(1)(A). 232 15 U.S.C. 7004(b)(1)(A). section 809(b).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76774 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

One commenter asked what a debt specified remedy.236 The Bureau status. The Bureau is adopting this collector should do if the debt collector proposed § 1006.6(c)(2) to implement relevant guidance in new comment receives a cease communication request these exceptions and generally restate 6(c)(2)–2 for mortgage servicers subject after communicating with a consumer the statute, with only minor changes for to the FDCPA with respect to a mortgage but before providing the consumer a clarity. The Bureau proposed comment loan. validation notice pursuant to FDCPA 6(c)(2)–1 to clarify that, consistent with 6(d) Communications With Third section 809(a).234 As the commenter the 2016 Servicing Final Rule 237 and Parties explained, FDCPA section 809(a) the concurrently issued 2016 FDCPA generally requires a debt collector to Interpretive Rule,238 the Bureau FDCPA section 805(b) prohibits a debt send a consumer a validation notice interprets the written early intervention collector from communicating, in within five days after the initial notice required under Regulation X 239 connection with the collection of any communication with the consumer as falling within the cease debt, with any person other than the (unless the validation was provided in communication exceptions in FDCPA consumer 246 or certain other the initial communication), and it is section 805(c)(2) and (3) (proposed as persons.247 FDCPA section 805(b) also unclear what the debt collector should § 1006.6(c)(2)(ii) and (iii)).240 identifies certain exceptions to this do if the consumer asks to cease The Bureau received no comments on prohibition. The Bureau proposed communication before the validation proposed § 1006.6(c)(2) or on proposed § 1006.6(d)(1) and (2), respectively, to notice is sent. To the extent any conflict comment 6(c)(2)–1 and therefore is implement FDCPA section 805(b)’s exists between FDCPA sections 805(c) finalizing them as proposed, with minor general prohibition against and 809(a), the Bureau notes that the non-substantive edits. Relatedly, one communicating with third parties and conflict is statutory and not a result of industry commenter requested that the the exceptions to that prohibition. this final rule. Nevertheless, the Bureau Bureau clarify whether periodic Additionally, the Bureau proposed believes that such circumstances may be statements for residential mortgage § 1006.6(d)(3) to specify, for purposes of rare in practice because many debt loans required under Regulation Z, 12 FDCPA section 813(c), procedures that collectors provide the validation notice CFR 1026.41(a) are exempt under are reasonably adapted to avoid an error in the initial communication as FDCPA section 805(c)(2) and (3). The in sending an email or text message that permitted under FDCPA section 809(a). Bureau previously addressed this would result in a violation of FDCPA And, to the extent that the validation question in its 2013 bulletin providing section 805(b). The Bureau proposed notice is not provided in the initial implementation guidance for certain § 1006.6(d) pursuant to its authority communication, many validation mortgage servicing rules,241 in which under FDCPA section 814(d) to write notices will have been prepared for the Bureau determined that, rules with respect to the collection of sending or sent before a debt collector notwithstanding a consumer’s cease debts by debt collectors. receives and processes any such cease communication request, a mortgage 6(d)(1) Prohibitions communication request.235 The Bureau servicer who is subject to the FDCPA is not aware of any such conflict causing with respect to a mortgage loan would With limited exceptions, FDCPA significant issues or consumer harms at not be liable under the FDCPA for section 805(b) prohibits a debt collector this time. Accordingly, the Bureau will complying with certain servicing rule from communicating, in connection monitor this issue for any potential provisions, including requirements to with the collection of any debt, with any consumer harm or compliance concerns provide a borrower with disclosures person other than the consumer (as and revisit at a later time if needed. regarding the forced placement of defined in FDCPA section 805(d)) or 242 certain other persons. The Bureau 6(c)(2) Exceptions hazard insurance, a disclosure regarding an adjustable-rate mortgage’s proposed § 1006.6(d)(1) to implement FDCPA section 805(c) provides initial interest rate adjustment,243 and a FDCPA section 805(b) and generally exceptions to the cease communication periodic statement for each billing restate the statute, with minor wording provision. The exceptions allow a debt cycle.244 The Bureau explained that and organizational changes for collector to communicate with a 248 these disclosures are specifically clarity. For the reasons discussed consumer even after a cease mandated by the Dodd-Frank Act,245 below, the Bureau is finalizing communication request: (1) To advise which makes no mention of their § 1006.6(d)(1) as proposed. the consumer that the debt collector’s potential cessation under the FDCPA One consumer advocate requested further efforts are being terminated; (2) and presents a more recent and specific that, to protect consumers’ privacy to notify the consumer that the debt statement of legislative intent regarding across all forms of communication, the collector or creditor may invoke these disclosures than does the FDCPA. Bureau ban debt collectors from specified remedies which are ordinarily The Bureau also explained that these communicating with third parties invoked by such debt collector or notices provide useful information to without the consumer’s written consent. creditor; or (3) where applicable, to consumers regardless of their collection The Bureau declines to adopt such an notify the consumer that the debt approach. FDCPA section 805(b) collector or creditor intends to invoke a 236 15 U.S.C. 1692c(c)(1)–(3). contemplates a debt collector 237 81 FR 72160 (Oct. 19, 2016). communicating with third parties 234 The Bureau proposed to implement FDCPA 238 81 FR 71977, 72233–38 (Oct. 19, 2016). subject to the prior consent of the section 809(a) in § 1006.34. As discussed in the 239 12 CFR 1024.39(d)(3). consumer given directly to the debt section-by-section analysis of § 1006.34, the Bureau 240 84 FR 23274, 23298–99 (May 21, 2019). intends to finalize that section in a disclosure- 241 focused final rule addressing the validation notice. CFPB Bulletin 2013–12, at 7 (Oct. 15, 2013), 246 The Bureau implements the term consumer as https://files.consumerfinance.gov/f/201310_cfpb_ 235 As discussed above, a debt collector who, used in section 805(b) in § 1006.6(a). mortgage-servicing_bulletin.pdf. notwithstanding the maintenance of procedures 247 15 U.S.C. 1692c(b). Specifically, FDCPA 242 reasonably adapted to avoid any such error, 12 CFR 1024.37. section 805(b) prohibits communicating with any communicates or attempts to communicate with a 243 12 CFR 1026.20(d). person other than the consumer, the consumer’s consumer after receiving, but before processing, a 244 12 CFR 1026.41. attorney, a consumer reporting agency if otherwise consumer’s cease communication request pursuant 245 Dodd-Frank Act sections 1418 (ARM initial permitted by law, the creditor, the creditor’s to § 1006.6(c)(1) may have a bona fide error defense interest rate adjustment), 1420 (periodic attorney, or the debt collector’s attorney. to civil liability under FDCPA section 813(c). statements), and 1463 (force-placed insurance). 248 84 FR 23274, 23299 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76775

collector but does not require that the does not violate [FDCPA section 805(b)] message that allows for such third-party consumer effectuate that prior consent when an eavesdropper overhears a limited-content messages. Accordingly, in writing. conversation with the consumer, unless the Bureau is not adopting proposed One industry commenter requested the debt collector has reason to comment 6(d)(1)–1. the Bureau clarify what constitutes a anticipate the conversation will be 6(d)(2) Exceptions third party. This commenter explained overheard.’’ 251 As discussed in detail that a debt collector frequently must below, the Bureau is finalizing FDCPA section 805(b) specifies speak with a consumer’s insurance procedures in § 1006.6(d)(3) through (5) exceptions to the general prohibition company or a State victim assistance that are designed to ensure that a debt against a debt collector communicating program to verify enrollment, and that collector who uses a specific email with third parties, including that a debt such a third-party communication is address or telephone number to collector may engage in an otherwise intended to benefit the consumer and communicate with a consumer by email prohibited communication with the should therefore be considered or text message does not have a reason prior consent of the consumer given permissible by the Bureau. to anticipate that an unauthorized third- directly to the debt collector. The FDCPA section 805(b) specifically party disclosure may occur.252 In other Bureau proposed § 1006.6(d)(2) to delineates the following persons with situations, unless the debt collector has implement the exceptions in FDCPA whom a debt collector may reason to anticipate that the section 805(b) and generally restate the communicate without violating the communication may be heard or read by statute, with minor wording and prohibition on communication with third parties, a debt collector who organizational changes for clarity.253 In third parties: The consumer, the unintentionally communicates with a relevant part, proposed § 1006.6(d)(2)(ii) consumer’s attorney, a consumer third party may be able to raise a bona would have implemented the statutory reporting agency if otherwise permitted fide error defense to civil liability under exception permitting third-party by law, the creditor, the attorney of the FDCPA section 813. communications with a person when creditor, or the attorney of the debt One State government commenter the debt collector has received prior collector. If a debt collector needs to suggested that, for active service consent directly from the consumer for communicate with any other person in members, debt collectors often call the such communications. connection with the collection of any member’s commanding officer to inform One industry commenter suggested debt, FDCPA section 805(b) provides an the supervisor about the outstanding that the Bureau clarify that prior exception, as discussed below,249 debt. The commenter requested that the consent under proposed permitting the debt collector to do so rule be revised to prohibit such § 1006.6(d)(2)(ii) includes consent the with the prior consent of the consumer violations of consumer privacy and job consumer gives to a third party to given directly to the debt collector. security. Unless the consumer has discuss debts with a debt collector. This Therefore, to the extent a debt collector provided consent for such commenter explained that, in some needs to speak with persons other than communications directly to the debt cases, a debt collector may receive from those listed in FDCPA section 805(b) collector or another exception in a debt settlement company an and implemented in § 1006.6(d)(1) of § 1006.6(d)(2) applies, such conduct authorization signed by a consumer this final rule, certain exceptions may already is prohibited by FDCPA section permitting the debt collector to apply permitting the debt collector to do 805(b) and will be prohibited by communicate about a debt with the debt so. § 1006.6(d)(1). settlement company. One industry commenter suggested For the reasons stated above, the The Bureau declines to clarify the that the Bureau adopt a safe harbor for Bureau is finalizing § 1006.6(d)(1) as prior consent exception as requested inadvertent communications with a proposed to provide that, except as because the scenario posed by the third party, such as if a third party hears provided in § 1006.6(d)(2), a debt commenter will depend upon the a debt collector’s voicemail message left collector must not communicate, in specific facts and circumstances as to on an answering machine. This connection with the collection of any whether the consent provided satisfies commenter suggested that, if the debt debt, with any person other than: The § 1006.6(d)(2)(ii). The Bureau therefore collector discloses the third-party consumer (as defined in § 1006.6(a)); the is finalizing § 1006.6(d)(2) as proposed communication to the consumer and consumer’s attorney; a consumer to provide that the prohibition in stops future communications with that reporting agency, if otherwise permitted § 1006.6(d)(1) does not apply when a third party, the debt collector should by law; the creditor; the creditor’s debt collector communicates, in not be liable for the disclosure. attorney; or the debt collector’s attorney. connection with the collection of any Federal government agency staff and Proposed comment 6(d)(1)–1 debt, with a person: (i) For the purpose some courts have found that debt explained that, because a limited- of acquiring location information, as collectors do not violate the FDCPA’s content message is not a provided in § 1006.10; (ii) with the prior prohibition on third-party disclosures communication, a debt collector does consent of the consumer given directly unless they have reason to anticipate not violate § 1006.6(d)(1) if the debt to the debt collector; (iii) with the that the communication may be heard or collector leaves a limited-content express permission of a court of read by third parties.250 As the FTC message for a consumer orally with a competent jurisdiction; or (iv) as previously explained, ‘‘[a] debt collector third party who answers the consumer’s reasonably necessary to effectuate a home or mobile telephone. As discussed postjudgment judicial remedy. 249 This exception is implemented in in the section-by-section analysis of The Bureau proposed comment § 1006.6(d)(2) as discussed further in the section-by- § 1006.2(j), the Bureau is declining to section analysis below. See the section-by-section 6(d)(2)–1 to refer to the commentary to analysis of § 1006.6(d)(2). finalize a definition of limited-content proposed § 1006.6(b)(4)(i) for guidance 250 See, e.g., Berg v. Merchants Ass’n Collection concerning a consumer giving prior Div., Inc., 586 F. Supp. 2d 1336, 1342, 1345 (S.D. 251 Statements of General Policy or Interpretation: consent directly to a debt collector. The Fla. 2008); Peak v. Prof’l Credit Serv., No. 6:14–cv– Staff Commentary on the FDCPA, 53 FR 50097, Bureau received no comments on 01856–AA, 2015 WL 7862774, at *5–6 (D. Or. Dec. 50104 (Dec. 13, 1988). 2, 2015); Chlanda v. Wymard, No. C–3–93–321, 252 See the section-by-section analysis of 1995 WL 17917574, at *2 (S.D. Ohio Sept. 5, 1995). § 1006.6(d)(3). 253 84 FR 23274, 23299 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76776 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

comment 6(d)(2)–1 and is finalizing it as FDCPA sections 805(b) and 813(c), the communications. This commenter proposed. Bureau is finalizing some portions of asserted that there is little third-party proposed § 1006.6(d)(3), and disclosure risk when a debt collector 6(d)(3) Reasonable Procedures for Email reorganizing and modifying others, as emails a consumer’s current or former and Text Message Communications final § 1006.6(d)(3) through (5). personal email address because, unlike Proposed § 1006.6(d)(3) identified The Bureau received a large number telephone numbers, email addresses are procedures reasonably adapted to avoid of comments in response to proposed rarely reassigned. Although the a violation of FDCPA section 805(b)’s § 1006.6(d)(3), including thousands of commenter conceded that the prohibition on third-party disclosures comments from individual consumers, reassignment of telephone numbers when communicating by email or text as well as comments from consumer increases the risk of third-party message.254 A debt collector who sent advocates, creditors, debt collectors, disclosure when debt collectors send an email or text message in accordance trade associations, some members of text messages, the commenter asserted with the proposed procedures would Congress, State Attorneys General, local that, because consumers regularly have been entitled to a bona fide error governments, and academics. Many change home addresses, the same degree defense to civil liability under FDCPA commenters addressed specific aspects of risk is present when a debt collector section 813(c) in the event of an of proposed § 1006.6(d)(3); these mails information to a consumer’s last unintentional third-party disclosure.255 comments are addressed where relevant known address. Further, the commenter Specifically, the Bureau proposed in the section-by-section analysis of argued, any third-party disclosure risk § 1006.6(d)(3) to provide a debt collector final § 1006.6(d)(3) through (5). that exists when a third party accesses with a safe harbor from civil liability 256 Immediately below, the Bureau a consumer’s email account or sees an for an unintentional third-party addresses the large number of comments email or text message on a publicly disclosure if, when communicating with that it received regarding the general visible screen is entirely within the a consumer using an email address or, operation of proposed § 1006.6(d)(3). consumer’s control. in the case of a text message, a The Bureau recognizes that electronic Risk of Consumer Harm Posed by Third- telephone number, the debt collector’s communications in debt collection offer Party Disclosures procedures included steps to reasonably benefits to consumers and debt confirm and document that the debt The Bureau received multiple collectors. The Bureau also recognizes collector: (1) Obtained and used the comments regarding the general risks to that electronic communications pose a email address or telephone number in consumers of third-party disclosures risk of third-party disclosure, such as accordance with one of the methods from electronic communications. when a debt collector sends a text described in proposed § 1006.6(d)(3)(i); Consumer and consumer advocate message to a telephone number that no and (2) took additional steps, in commenters argued that the longer belongs to the consumer, and, for accordance with proposed reassignment of telephone numbers,257 some consumers, such a disclosure may § 1006.6(d)(3)(ii), to prevent and the sharing of email accounts and cause harm. However, the Bureau communications using an email address telephone numbers between family emphasizes that there is no empirical or telephone number that the debt members, increase the risk that a debt data in the rulemaking record collector knew had led to an collector who sends an email or text demonstrating whether and to what unauthorized third-party disclosure. message will disclose sensitive debt extent the privacy risks from electronic Proposed § 1006.6(d)(3)(i)(A) through collection information to a third party communications in debt collection are (C) described three methods of obtaining not authorized to receive it. Moreover, greater than, the same as, or less than and using an email address or telephone some commenters noted, emails and those associated with non-electronic number for text messages, none of text messages may be viewable by a communications in debt collection. In which would have required a debt consumer’s email or telephone provider finalizing the procedures in collector to obtain a consumer’s direct or appear on a publicly visible screen, § 1006.6(d)(3) through (5), the Bureau prior consent (or ‘‘opt in’’) before such as when a consumer accesses has considered the benefits and risks of communicating by email or text email at the library. Several consumer electronic communications based on the message. As discussed throughout the advocate commenters stated that third- information in the rulemaking record.258 section-by-section analysis of party disclosures could cause § 1006.6(d)(3) through (5), and pursuant consumers to suffer reputational Reason-To-Anticipate Standard to its authority under FDCPA section damage; increased risk of identity theft; A few commenters addressed the 814(d) to implement and interpret and shame and other emotional pain, Bureau’s proposal to design the particularly when the third party to procedures in proposed § 1006.6(d)(3) 254 See 15 U.S.C. 1692c(b); 84 FR 23274, 23299– whom the disclosure is made is an so that a debt collector who uses them 04 (May 21, 2019). employer, family member, or friend. 255 does not have reason to anticipate a 15 U.S.C. 1692k(c) (providing that a debt One industry commenter 259 collector may not be held liable in any action third-party disclosure. A consumer brought under the FDCPA if the debt collector characterized email and text message advocate commenter opposed the shows by a preponderance of the evidence that the communications as posing no more reason-to-anticipate standard, noting violation was not intentional, that it resulted from third-party disclosure risk than that consumers can be harmed even by a bona fide error, and that it occurred even though the debt collector maintained procedures traditional mail and telephone reasonably adapted to avoid the error). As 258 Section 1006.6(d)(3) through (5) addresses the explained in the proposal, the Bureau reasoned that 257 According to a 2018 FCC notice of proposed risk of third-party disclosure posed by electronic a debt collector who communicated by email or text rulemaking, nearly 35 million telephone numbers communications. Other risks posed by electronic message in compliance with the proposed are disconnected and made available for communications, such as the potential that debt procedures would not have reason to anticipate a reassignment each year. Advanced Methods to collectors may use them in harassing ways, are prohibited third-party disclosure. See 84 FR 23274, Target and Eliminate Unlawful Robocalls, 83 FR addressed in other provisions of the final rule, 23300 (May 21, 2019). 17631, 17632 (Apr. 23, 2018) (‘‘Consumers including § 1006.6(e) and § 1006.14(a). 256 See note 6, supra, explaining the Bureau’s use disconnect their old numbers and change to new 259 See 84 FR 23274, 23300 n.238 (May 21, 2019) of the phrase ‘‘safe harbor from civil liability’’ telephone numbers for a variety of reasons, (citing FTC staff and court opinions finding that throughout this Notice when discussing the effect including switching wireless providers without debt collectors do not violate FDCPA section 805(b) of following the procedures in § 1006.6(d)(3) porting numbers and getting new wireline unless they have reason to anticipate that a through (5). telephone numbers when they move.’’). disclosure may be heard or read by third parties).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76777

unforeseeable disclosures. An industry collector to use obviously incorrect proposed § 1006.6(d)(3), or developing commenter supported the standard, email addresses merely because the new procedures, to cover additional arguing that debt collectors should not addresses were obtained consistent with communication technologies, such as be penalized for third-party disclosures § 1006.6(d)(3) would not satisfy the smart phone notifications, ringless they had no reason to anticipate, requirement to reasonably confirm and voicemails, and traditional telephone particularly when the circumstances document compliance.261 In this calls and voicemails. Each of these giving rise to a disclosure, such as a circumstance, any purported contexts may pose third-party third party’s access to the consumer’s confirmation of the debt collector’s disclosure risks that differ, in varying email account or telephone, are out of compliance with § 1006.6(d)(3) would degrees, from the third-party disclosure the debt collector’s control. not be reasonable. risks posed by email and text message As in the proposal, the Bureau has Scope of Procedures communications. Because the Bureau designed the procedures in the final rule did not propose procedures related to The procedures in proposed around the reason-to-anticipate other communications technologies, it standard. The reason-to-anticipate § 1006.6(d)(3) would have applied only lacks the benefit of public comment standard recognizes that it is generally to a debt collector’s email and text about what such procedures might look not possible for a debt collector to message communications.262 Two like.263 Developing procedures to cover eliminate entirely the risk that a third industry commenters requested that the party will see or hear a debt collection Bureau clarify the term email. One did such technologies is outside the scope communication. The standard is not propose a definition, while the other of this rulemaking. therefore consistent with FDCPA section asked the Bureau to adopt an expansive The Bureau reiterates, however, that 813(c), which protects debt collectors definition that would include private the final rule identifies neither the only who unintentionally violate the statute communication tools offered by social circumstances in which a debt collector notwithstanding the use of reasonable media platforms. This commenter may communicate with a consumer procedures. FDCPA section 813(c), like asserted that social media accounts, like electronically nor the only technologies the reason-to-anticipate standard, email accounts, are password protected a debt collector may use to do so. Nor generally recognizes that a debt and generally not reassigned, and, as a does it identify the only procedures that collector acting in good faith pursuant result, direct messaging may be reasonably adapted to avoid a to reasonable procedures should not be communications on social media should violation of the prohibition on third- liable for errors (in this context, a third- be treated the same as email party disclosures. Thus, a debt collector party disclosure) that the debt collector communications. The commenter also would not necessarily violate did not intend and could not have stated that the definition of email § 1006.6(d)(1) or FDCPA section 805(b) foreseen. should include mobile application or by communicating with a consumer web-based technologies that allow Reasonably Confirm and Document electronically other than by email or consumers to initiate a live written text message, or by email or text An industry commenter asked the conversation with a business through a message without using the procedures Bureau to clarify the proposed ‘‘chat box.’’ in § 1006.6(d)(3) through (5). Moreover, requirement that a debt collector’s A group of consumer advocate depending on the facts, a debt collector procedures include steps to reasonably commenters asked the Bureau to clarify might be able to show by a confirm and document that the debt that the term email does not include preponderance of the evidence that any collector acted in accordance with direct messages, whether sent through third-party disclosures were proposed § 1006.6(d)(3).260 Another social media platforms or free-standing unintentional and that the debt collector industry commenter suggested that messaging platforms. These commenters employed procedures reasonably procedures to reasonably confirm and asserted that, on some direct messaging adapted to avoid them. document compliance should include platforms, users search for each other by an audit component and asked the first and last name rather than by a First-Party Debt Collectors Bureau to publish sample procedures. distinct and individual user name, Consumer and consumer advocate which increases the likelihood of Two credit union commenters asked commenters generally did not address misdirected messages, particularly the Bureau to clarify the rules for the proposed requirement to reasonably among consumers with common names. creditors’ use of email and text confirm and document compliance. In light of the apparent variations in messages. The procedures in The final rule retains the requirement direct messaging technology, the Bureau § 1006.6(d)(3) through (5) apply to that a debt collector’s procedures is unable to assess how well the FDCPA debt collectors only. Creditors include steps to reasonably confirm and procedures in final § 1006.6(d)(3) who are not FDCPA debt collectors are document that the debt collector acted through (5) would address the risk of not subject to the FDCPA’s prohibition in accordance with § 1006.6(d)(3). third-party disclosures in the direct on third-party disclosures, although Depending on their size, the scope of messaging context. Therefore, for they are covered by other consumer their operations, and other business- purposes of § 1006.6(d)(3) through (5), financial laws. To the extent specific facts, different debt collectors the Bureau declines to define the term commenters were requesting that the may take different approaches to email to include direct messaging Bureau develop and finalize procedures reasonably confirming and documenting technology in mobile applications or on applicable to creditors, such a request is compliance with § 1006.6(d)(3). The social media. Debt collectors may use outside the scope of this rulemaking. Bureau declines to specify by rule a these communication media, subject to single set of steps or elements that all the requirements and prohibitions of the 263 See 84 FR 23274, 23300 (May 21, 2019) (‘‘The procedures must or should include FDCPA and the final rule. procedures in proposed § 1006.6(d)(3) address under § 1006.6(d)(3). As the Bureau Multiple industry commenters email and text message communications only. At noted in the preamble to the proposal, advocated expanding the procedures in this time, the Bureau does not propose procedures related to the use of less-developed and less- however, procedures permitting a debt widespread forms of electronic communications 261 See id. at 23300. because consumers do not appear accustomed to 260 See id. at 23301. 262 See id. using such technologies in their financial lives.’’).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76778 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Telephone Consumer Protection Act creditor or a prior debt collector had prevent communications using an email The Telephone Consumer Protection obtained the email address or telephone address or telephone number that the Act (TCPA) generally prohibits the use number from the consumer and used it debt collector knew had led to an of automated dialing equipment to call to communicate about the debt unauthorized third-party disclosure. a telephone number without a (proposed § 1006.6(d)(3)(i)(C), the The Bureau proposed § 1006.6(d)(3)(ii) ‘‘creditor-or-prior-debt-collector-use’’ consumer’s consent.264 A group of on the basis that a debt collector whose method). As proposed, the methods in consumer advocate commenters asked procedures are not designed to prevent § 1006.6(d)(3)(i)(A) through (C) did not the Bureau to clarify how the Bureau’s recurrence of a known violation may distinguish between communications procedures interact with the TCPA. intend to convey information related to sent by email and communications sent Congress has vested the FCC—not the the debt or its collection to a third party. by text message. Bureau—with authority to implement A group of consumer advocate 265 Many commenters offered substantive the TCPA. The final rule does not feedback about the three methods of commenters argued that proposed interpret the TCPA; nor does anything obtaining and using email addresses and § 1006.6(d)(3)(ii) did not sufficiently in the final rule alter any FCC rule or telephone numbers described in address the risk of repeat third-party any obligation imposed on debt proposed § 1006.6(d)(3)(i)(A) through disclosures. According to these collectors by such a rule. (C). Those comments are addressed commenters, the Bureau should simply For the reasons discussed above, the where relevant in the section-by-section require debt collectors to stop using an Bureau is finalizing § 1006.6(d)(3), analysis of § 1006.6(d)(4) and (5). Some email address or telephone number for which sets forth procedures that debt commenters also highlighted the collectors may use to reduce their risk text messages if the debt collector differences between email and text knows that using the address or of civil liability for unintentional third- message communications, noting the party disclosures when communicating telephone number has led to a third- unique third-party disclosure risks party disclosure, unless the consumer with consumers by email or text presented by the reassignment of mobile has expressly consented. One industry message. In response to numerous telephone numbers. comments regarding the details of the After considering the public commenter requested that the Bureau proposed procedures, and as discussed comments, the Bureau is, as proposed, provide examples of additional steps a in detail below, the Bureau is finalizing finalizing § 1006.6(d)(3)(i) to identify debt collector could take to prevent procedures that differ substantively and the first of two conditions that a debt communications using an email address organizationally from those that the collector must satisfy to obtain a safe or telephone number that the debt Bureau proposed.266 harbor from civil liability for an collector knows has led to a third-party disclosure. 6(d)(3)(i) unintentional third-party disclosure when communicating by email or text The Bureau is finalizing As proposed, § 1006.6(d)(3)(i) message. However, in light of comments § 1006.6(d)(3)(ii) with modifications for identified the first of two conditions highlighting the different third-party clarity. Specifically, § 1006.6(d)(3)(ii) that a debt collector would have had to disclosure risks of email provides that, to obtain a safe harbor satisfy to obtain a safe harbor from civil communications and text message from civil liability, a debt collector’s liability for an unintentional third-party communications, the final rule sets forth procedures must include steps to disclosure when communicating by different procedures for email messages email or text message. Under proposed reasonably confirm and document that and text messages and also addresses the debt collector did not communicate § 1006.6(d)(3)(i), the debt collector’s them separately (email in § 1006.6(d)(4) with the consumer by sending an email procedures would have had to include and text messages in § 1006.6(d)(5)). To to an email address or a text message to steps to reasonably confirm and reflect this change, final § 1006.6(d)(3)(i) document that the debt collector provides that, for a debt collector to a telephone number that the debt communicated using an email address, obtain a safe harbor from civil liability collector knows has led to a disclosure or telephone number for text messages, for an unintentional third-party prohibited by § 1006.6(d)(1). in accordance with one of the three disclosure, a debt collector’s procedures The Bureau is not adopting the methods described in proposed must include steps to reasonably suggestion to require debt collectors § 1006.6(d)(3)(i)(A) through (C). confirm and document that the debt simply to stop using email addresses As proposed, § 1006.6(d)(3)(i)(A) collector communicated with the and telephone numbers that have led to through (C) provided a safe harbor if, consumer by sending an email to an third-party disclosures. As noted, the among other things, the consumer had email address described in Bureau is finalizing § 1006.6(d)(3) used the email address or telephone § 1006.6(d)(4) or a text message to a through (5) as an interpretation of number to communicate with the debt telephone number described in FDCPA section 813(c)’s bona fide error collector (proposed § 1006.6(d)(3)(i)(A), § 1006.6(d)(5). defense. A bona fide error defense is the ‘‘consumer-use’’ method); the 6(d)(3)(ii) only available under FDCPA section consumer received notice and an 813(c) if a debt collector maintains Proposed § 1006.6(d)(3)(ii) identified opportunity to opt out of the debt procedures reasonably adapted to avoid the second of two conditions a debt collector’s use of the email address or an error. Accordingly, § 1006.6(d)(3)(ii) telephone number for text messages collector would have had to satisfy to is framed in terms of a debt collector’s (proposed § 1006.6(d)(3)(i)(B), the obtain a safe harbor from civil liability procedures. The Bureau notes, however, ‘‘notice-and-opt-out’’ method); or the for an unintentional third-party disclosure when communicating by that, if a debt collector sends repeated 264 See 47 U.S.C. 227; ACA Int’l v. Fed. Commc’ns email or text message. Specifically, emails to an email address or text Comm’n, 885 F.3d 687 (D.C. Cir. 2018). under proposed § 1006.6(d)(3)(ii), the messages to a telephone number that the 265 See 47 U.S.C. 227(b)(2). debt collector’s procedures would have debt collector knows has led to a third- 266 The text of the introductory paragraph of final had to include steps to reasonably party disclosure, that conduct would § 1006.6(d)(3) is largely the same as the text of the likely show that the debt collector’s introductory paragraph of proposed § 1006.6(d)(3), confirm and document that the debt with technical edits for clarity. collector took additional steps to procedures are not reasonable and that

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76779

the debt collector is not entitled to a safe confirm and document that the debt commenters argued that employees may harbor from civil liability.267 collector communicated with the not be aware that employers can and do In response to the industry consumer using an email address, monitor emails sent or received on commenter’s request for examples, the including an employer-provided email employer-provided accounts, and that Bureau is adopting new comment address, that the consumer recently even consumers who are aware of this 6(d)(3)(ii)–1, which clarifies that, for used to contact the debt collector for possibility likely would be unaware that purposes of § 1006.6(d)(3)(ii), a debt purposes other than opting out of sending a carefully worded email to a collector knows that sending an email to electronic communications.268 As debt collector could insulate the debt an email address or a text message to a discussed below, the Bureau is collector from third-party disclosure telephone number has led to a finalizing the email procedures in liability if the debt collector replied to disclosure prohibited by § 1006.6(d)(1) proposed § 1006.6(d)(3)(i)(A) as that address. if any person has informed the debt § 1006.6(d)(4)(i), with modifications and The Bureau determines that collector of that fact. Thus, to comply additions to address comments consumers are generally better with § 1006.6(d)(3)(ii), it is necessary received, and with revisions for clarity. positioned than debt collectors to (but not sufficient) for a debt collector The Bureau received numerous determine if third parties have access to to accept and track complaints. comments regarding its assumption that a particular email account, whether a debt collector may not have reason to personal or employer provided. A 6(d)(4) Procedures for Email Addresses anticipate a third-party disclosure when consumer who uses a particular email As noted above, the final rule sending an email to an email address, address to contact a debt collector about reorganizes proposed § 1006.6(d)(3)(i) including an employer-provided email a debt likely expects the debt collector by separating email procedures and text address, that the consumer recently to respond using the same address. In message procedures, and final used to communicate with the debt addition, because a third party with § 1006.6(d)(4) describes the three collector. The Bureau reasoned that a access to a consumer’s email account procedures that a debt collector may use consumer generally is better positioned typically can read outgoing and to obtain a safe harbor from civil than a debt collector to determine incoming communications, an email liability for an unintentional third-party whether third parties have access to a message sent by a consumer to a debt disclosure when communicating by specific email address, and a collector may, like an email message email. The final email procedures are consumer’s decision to communicate received by a consumer from a debt discussed in detail in the section-by- with a debt collector using a specific collector, result in a third-party section analysis of § 1006.6(d)(4)(i) email address may suggest that the disclosure. For these reasons, the through (iii). consumer assessed the risk of third- Bureau continues to believe that a The Bureau received one overarching party disclosure to be low.269 consumer’s willingness to use an email comment regarding its proposed email In general, industry commenters address to contact a debt collector procedures. One industry commenter supported the Bureau’s reasoning, while without conditions suggests that the risk stated that requiring debt collectors to several consumer advocate commenters of third-party disclosure is low if the encrypt email communications or rejected it. Consumer advocate debt collector responds to that email. protect them with passwords would commenters generally asserted that it is Therefore, a debt collector who uses reduce the risk of third-party disclosure. unlikely that consumers will have done such an email address generally would As proposed, the email procedures a third-party disclosure risk analysis lack reason to anticipate a third-party would not have required encryption or before using a particular email address disclosure, unless the consumer has password protection, and the Bureau to communicate with a debt collector, asked the debt collector not to engage in declines to require debt collectors to and that consumers who lack regular such communications.270 take these steps to obtain a safe harbor access to a computer or email address The Bureau also received numerous from civil liability for third-party might use another person’s email comments regarding proposed disclosures. The Bureau notes, however, address to communicate with the debt § 1006.6(d)(3)(i)(A)’s recency that a debt collector who encrypts its collector. Consumer advocate requirement, i.e., the requirement that emails or protects them with a password commenters also asserted that a the email address be one that the would not thereby lose access to a safe consumer may feel some urgency to consumer recently used to contact the harbor from civil liability under contact a debt collector and may use a debt collector. While many commenters § 1006.6(d)(3) for which the debt certain email address to do so without confirmed that telephone numbers are collector otherwise qualified. intending to establish that address as a regularly reassigned, several industry regular means of contact. As to commenters stated that email addresses 6(d)(4)(i) Procedures Based on employer-provided email addresses typically are not reassigned and that the Communication Between the Consumer specifically, consumer advocate proposed recency requirement for email and the Debt Collector addresses therefore was unnecessary. Proposed § 1006.6(d)(3)(i)(A) (the 268 As noted, proposed § 1006.6(d)(3)(i)(A) would Several industry commenters also ‘‘consumer-use’’ method) for emails have applied to both email addresses and telephone objected on the ground that a recency provided that a debt collector could numbers, but final § 1006.6(d)(4)(i) applies only to requirement would impose a burden on email addresses. This section-by-section analysis obtain a safe harbor from civil liability therefore addresses proposed § 1006.6(d)(3)(i)(A) debt collectors to track information, for an unintentional third-party only with respect to comments that specifically such as when a consumer last used an disclosure if, in addition to complying discussed email addresses, or that did not email address. A group of consumer with § 1006.6(d)(3)(ii), the debt collector distinguish between email addresses and telephone advocate commenters acknowledged numbers. Comments received in response to maintained procedures to reasonably proposed § 1006.6(d)(3)(i)(A) that discussed that email addresses are reassigned far telephone numbers are addressed in the section-by- 267 Moreover, depending on the facts, a debt section analysis of § 1006.6(d)(5)(i). 270 The Bureau notes that § 1006.14(h) prohibits a collector who repeatedly sends an email or a text 269 See 84 FR 23274, 23301 (May 21, 2019) debt collector from communicating or attempting to message to an email address or telephone number (discussing the Bureau’s rationale for including communicate with a person through a medium of that the debt collector knows has led to a third- both employer-provided and personal email communication if the person has requested that the party disclosure may violate FDCPA section 808’s addresses in the proposed § 1006.6(d)(3)(i)(A) safe debt collector not use that medium to communicate prohibition on unfairness. harbor). with the person.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76780 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

less frequently than telephone numbers generally does not have reason to email address used by the creditor to but nevertheless supported the recency anticipate that using the email address send the consumer delinquency requirement for email addresses. to communicate with the consumer will communications in the months before The Bureau has decided not to lead to a third-party disclosure. an account is placed for collection. include a recency requirement as part of Accordingly, and as discussed below, As the Bureau noted in the proposal, the email procedures in final the final rule includes a new provision, a consumer might agree to receive § 1006.6(d)(4)(i).271 The Bureau § 1006.6(d)(4)(i)(B), to account for the electronic communications from a proposed the recency requirement direct consent scenario.276 creditor without considering the risk principally to address the risk that a Many industry commenters also that a third party might read those telephone number might be reassigned requested that the Bureau expand the communications, but a consumer who is from one consumer to another, and procedures in proposed indifferent to the disclosure of creditor would have applied the requirement to § 1006.6(d)(3)(i)(A), or create new communications may not be indifferent email addresses largely for consistency procedures, to cover not only an email to the disclosure of debt collection and ease of administration.272 In light of address that the consumer provided to communications.277 Thus, a consumer’s comments asserting that a recency the debt collector, but also an email decision to communicate electronically requirement imposes some burden on address that the consumer provided to, with a creditor does not, without more, creditors and debt collectors to track or used to contact, the creditor. Some of suggest that the risk of third-party and transfer information, and comments these commenters argued that, if a disclosure is particularly low. Nor does indicating that emails are reassigned consumer provided an email address a disclosure in account opening infrequently if at all, the Bureau when opening an account or materials, without more, suggest that the concludes that a recency requirement communicating with a creditor, the risk of third-party disclosure is should not apply to email addresses.273 consumer knew or should have known particularly low. Years may pass, and a Several industry commenters that the debt collector would use the consumer’s circumstances may change, requested that the Bureau expand the email address to collect the debt, and between the time a consumer opens an procedures in proposed there is no need to delay the collection account and the time the account is § 1006.6(d)(3)(i)(A), or create new process by requiring consumers to re- transferred to a debt collector. The procedures, to protect a debt collector confirm their preferences. Similarly, an Bureau therefore declines to add the who communicates with a consumer by industry commenter argued that a procedures requested by these email after receiving the consumer’s consumer who has chosen to commenters. The Bureau notes, permission to use the email address for communicate with a creditor however, that nothing in debt collection communications, such electronically should be assumed to § 1006.6(d)(4)(i) prohibits a debt as if the consumer provides the email prefer communicating with a debt collector from sending an email to an address to the debt collector over the collector electronically, and that an opt- email address provided by the consumer telephone or while using the debt in system burdens consumer choice and to the creditor. Depending on the facts, collector’s website, or provides the delays the collection process by a debt collector may be able to do so email address to a court for purposes of imposing an additional requirement without violating FDCPA section 278 receiving electronic service of before debt collectors may begin 805(b). process.274 The Bureau concludes that, electronic debt collection For the reasons discussed above, the if a consumer has directly consented to communications. Some commenters Bureau is finalizing proposed a debt collector’s use of a particular advocated for a safe harbor from civil § 1006.6(d)(3)(i)(A) as § 1006.6(d)(4)(i). email address and has not withdrawn liability as long as the creditor’s account Section 1006.6(d)(4)(i)(A) provides that a debt collector may obtain a safe harbor that consent,275 the debt collector opening materials disclosed that an email address the consumer gives the from civil liability for an unintentional 271 As discussed in the section-by-section analysis creditor could be used for debt third-party disclosure when sending an of § 1006.6(d)(5), the Bureau is finalizing a recency collection purposes. Other commenters, email to an email address if the requirement as part of the text message procedures. recognizing that a consumer’s consumer used the email address to 272 See 84 FR 23274, 23301 (May 21, 2019) communication preferences may change communicate with the debt collector (discussing that emails are not regularly reassigned about the debt and the consumer has not but proposing to apply the recency requirement to over time and that years may elapse emails as well as to telephone numbers for between when a consumer provides a since opted out of communications to 279 consistency and ease of administration of the creditor with electronic contact that email address. Section regulation). Although it appears that at least one information and when a creditor email provider does allow email addresses to be 277 transfers the consumer’s debt to a debt See 84 FR 23274, 23304 (May 21, 2019). reassigned, it is unclear how often this occurs and 278 For example, in some circumstances, a commenters generally agreed that, to the extent it collector, suggested a safe harbor for consumer’s willingness to receive delinquency happens, email reassignment is far less common email addresses provided by the communications from a creditor electronically may that telephone number reassignment. See AJ better suggest that the risk of third-party disclosure Dellinger, Yahoo Hack: Why You Shouldn’t Delete consumer to the creditor within a particular timeframe, such as within the is low than a consumer’s willingness to receive Your Email Address, Account, Int’l Bus. Times (Oct. routine account communications from a creditor 5, 2017). 270 days preceding the debt collector’s electronically. Similarly, in some circumstances, a 273 To the extent that commenters addressed use. Another industry commenter debt collector’s use of an email address or specific elements of the proposed recency suggested a safe harbor for a debt telephone number recently provided by the requirement for emails, such as how to define consumer to the creditor may pose lower third- ‘‘recent,’’ those comments are moot because the collector who sends an email to an party disclosure risk than a debt collector’s use of Bureau is not finalizing a recency requirement for an email address or telephone number provided by emails. The Bureau therefore does not discuss them. communicates electronically must provide the consumer to the creditor at account opening. 274 Relatedly, a group of academic commenters consumers with a reasonable and simple way to opt 279 Proposed § 1006.6(d)(3)(i)(A) specified that a requested that the Bureau prohibit debt collectors out of such communications. debt collector could not use an email address used from using embedded cookies, which can track a 276 As discussed in the section-by-section analysis by the consumer to opt out of electronic user’s browsing history, on their websites. The of § 1006.6(d)(5)(ii), the final rule similarly includes communications. As finalized, § 1006.6(d)(4)(i)(A) Bureau does not further address this comment, as a new provision covering a debt collector who retains this prohibition: A debt collector is not it is outside the scope of the rulemaking. communicates with a consumer by text message covered by § 1006.6(d)(4)(i)(A) if the debt collector 275 As explained in the section-by-section after receiving the consumer’s unwithdrawn direct communicates using an email address the consumer analysis of § 1006.6(e), a debt collector who consent to do so. used to opt out of electronic communications.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76781

1006.6(d)(4)(i)(B) provides that a debt The Bureau received a number of other screening devices; 284 and (5) collector may obtain a safe harbor from comments relating to the general weigh any privacy-related risks, civil liability for an unintentional third- concept of permitting a debt collector to including that emails and text messages party disclosure when sending an email use notice-and-opt-out procedures to could be viewed by a consumer’s to an email address if the debt collector obtain a safe harbor from civil liability telephone or email provider, could has received directly from the consumer for unintentional third-party disclosures appear on a publicly visible computer or prior consent to use the email address when sending an email to a telephone screen, or could be coming to communicate with the consumer consumer.282 Industry commenters from a phony, rather than legitimate, about the debt and the consumer has not generally supported the Bureau’s debt collector. withdrawn that consent. reasoning that a consumer’s failure to The Bureau recognizes that, as The Bureau also is adopting new opt out after receiving notice that an consumer advocates observed, for an comments 6(d)(4)(i)(B)–1 and –2 to email address could be used for debt opt-out system to work the consumer clarify the meaning of direct prior collection communications may suggest must, among other things, actually consent for purposes of that the consumer has assessed the risk receive the opt-out notice and have the § 1006.6(d)(4)(i)(B). Comment of third-party disclosure to be low. opportunity to consider it. The Bureau 6(d)(4)(i)(B)–1 clarifies that a consumer Industry commenters also generally also recognizes that a consumer who may provide direct consent orally, in opposed any requirement that receives an opt-out notice may ignore it, writing, or electronically. Comment consumers opt into electronic fail to consider the risks of receiving 6(d)(4)(i)(B)–2 clarifies that, if a communications, with several emails (including the risk of third-party consumer provides an email address to predicting that few consumers would disclosure), or not take the steps a debt collector (including on the debt opt in, and that, as a result, electronic necessary to opt out. However, the collector’s website or online portal), the communications would be unlikely to Bureau believes that the safeguards it debt collector may treat the consumer as take place at all. These commenters has incorporated in the rule, which are having consented directly to the debt noted that, in at least one State that discussed below, will mitigate these collector’s use of the email address to requires consumers to opt into email concerns.285 For these reasons, the communicate with the consumer about communications, debt collectors Bureau is finalizing the notice-and-opt- the debt for purposes of generally do not use email to out method in proposed § 1006.6(d)(4)(i)(B) if the debt collector communicate with consumers.283 discloses clearly and conspicuously that Consumer advocate commenters § 1006.6(d)(3)(i)(B) as § 1006.6(d)(4)(ii), the debt collector may use the email requested that the Bureau not adopt a with modifications as discussed in the address to communicate with the notice-and-opt-out approach. These section-by-section analysis of consumer about the debt.280 commenters argued that the Bureau § 1006.6(d)(4)(ii)(A) through (E) to should permit electronic increase the likelihood that a consumer 6(d)(4)(ii) Procedures Based on communications only pursuant to an will have an opportunity to make an Communication by the Creditor opt-in approach, which would enable adequately informed choice whether to Proposed § 1006.6(d)(3)(i)(B) (the consumers, before agreeing to electronic opt out of receiving emails. ‘‘notice-and-opt-out’’ method) generally communications, to: (1) Weigh any risks 6(d)(4)(ii)(A) provided that a debt collector could due to irregular internet or cellphone obtain a safe harbor from civil liability access; (2) confirm the addresses and As proposed, the notice-and-opt-out for an unintentional third-party telephone numbers to which electronic method in § 1006.6(d)(3)(i)(B) generally disclosure if, in addition to complying communications may be directed, would have provided a safe harbor from with § 1006.6(d)(3)(ii), the debt collector ensuring that, particularly for civil liability for debt collector maintained procedures to reasonably consumers who regularly change communications sent to any personal confirm and document that: (1) The debt telephone numbers or abandon email email address other than the address to collector communicated with the addresses, communications are sent to which the opt-out notice itself was sent, consumer using a personal email the consumer rather than to a third provided the other opt-out requirements address after the creditor or the debt party; (3) weigh the financial cost of were met. Under proposed collector provided the consumer with electronic communications (for § 1006.6(d)(3)(i)(B), then, a debt notice of such communications and a consumers with limited text message or collector could have used the notice- reasonable opportunity to opt out; and data plans); (4) familiarize themselves and-opt-out method to obtain a safe (2) the consumer did not opt out.281 with the sender and weigh any security harbor from civil liability for an risks, helping to ensure that consumers unintentional third-party disclosure 280 A consumer who consents to electronic actually would open emails and when sending an email to an email service of process typically provides consent to the court rather than to the debt collector. Accordingly, minimizing the chance that emails a consumer’s consent to electronic service of would be blocked by spam filters and 284 As the Bureau noted in the proposal, several process generally is not covered by Federal agencies advise consumers not to open § 1006.6(d)(4)(i)(B). The Bureau believes, however, telephone numbers are addressed in the section-by- emails from senders they do not recognize. See 84 that a debt collector generally would lack reason to section analysis of § 1006.6(d)(5). FR 23274, 23363 n.578 (May 21, 2019). anticipate a third-party disclosure when sending an 282 Commenters also submitted numerous 285 See in particular the section-by-section email to an email address if the consumer has comments about particular aspects of proposed analysis of § 1006.6(d)(4)(ii)(C), which discusses agreed to receive litigation communications relating § 1006.6(d)(3)(i)(B); those comments are addressed that: (1) The opt-out notice must come from the to the debt at that address. where relevant in the section by section analysis of creditor, be provided in written or electronic form, 281 As noted, proposed § 1006.6(d)(3)(i)(B) would § 1006.6(d)(4)(ii)(A) through (E). and describe the third-party disclosure have applied to both email addresses and telephone 283 See 23 CRR–NY 1.6 (permitting a debt considerations implicated by debt collection numbers, but final § 1006.6(d)(4)(ii) applies only to collector to communicate with a consumer by email communications; and (2) the consumer must be email addresses. This section-by-section analysis only if the consumer has ‘‘(1) voluntarily provided provided a reasonable and simple method to opt out therefore addresses proposed § 1006.6(d)(3)(i)(B) an electronic mail account to the debt collector and at least 35 days to do so. See also the section- only with respect to comments that specifically which the consumer has affirmed is not an by-section analysis of § 1006.6(d)(4)(ii)(E), which discussed email addresses, or that did not electronic mail account furnished or owned by the clarifies that debt collectors proceeding under the distinguish between email addresses and telephone consumer’s employer; and (2) consented in writing opt-out method generally cannot obtain a safe numbers. Comments received in response to to receive electronic mail correspondence from the harbor from civil liability when emailing a proposed § 1006.6(d)(3)(i)(B) that discussed debt collector in reference to a specific debt’’). consumer at an employer-provided email address.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76782 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

address obtained through skip tracing or at account opening,289 or at a later stage about an account, a debt collector may any other method. of the parties’ relationship, or the have reason to anticipate that using the To increase the likelihood that the consumer might voluntarily provide the address to communicate about the debt email address for which a debt collector email address on a website or otherwise. could lead to a third-party disclosure. using the notice-and-opt-out method The Bureau does not believe it is For these reasons, the Bureau is obtains a safe harbor actually belongs to necessary to specify by rule precisely finalizing § 1006.6(d)(4)(ii)(B), which the consumer, and thereby minimize the how a debt collector would know that provides that, for purposes of the notice- risk of a third-party disclosure, the the creditor had obtained an email and-opt-out method, a debt collector Bureau finds that it is important to limit address from the consumer. Different may send an email only to an email the types of email addresses debt debt collectors may have different address used by the creditor to collectors may use on an opt-out basis. approaches to reasonably confirming communicate with the consumer about An email address obtained by the and documenting this fact. the account, and only if the consumer creditor directly from the consumer is did not ask the creditor to stop using it. 6(d)(4)(ii)(B) highly likely to belong to the consumer; The Bureau also is adopting new by contrast, an email address obtained As noted, the notice-and-opt-out comment 6(d)(4)(ii)(B)–1 to clarify the through skip tracing generally lacks the method in proposed § 1006.6(d)(3)(i)(B) types of communications that constitute same degree of reliability.286 For these generally would have provided a safe communications about the account for reasons, the Bureau is finalizing harbor for debt collector purposes of § 1006.6(d)(4)(ii)(B). § 1006.6(d)(4)(ii)(A), which provides communications sent to any personal Final § 1006.6(d)(4)(ii)(B) is similar to that, for purposes of the notice-and-opt- email address other than the address to aspects of proposed § 1006.6(d)(3)(i)(C), out method, the debt collector may send which the opt-out notice was sent, which, as discussed in the section-by- an email only to an email address that provided the other opt-out requirements section analysis of final a creditor obtained from the consumer. were met. There was no requirement § 1006.6(d)(4)(iii), provided that a debt Final § 1006.6(d)(4)(ii)(A) is similar to that the creditor (or any other person) collector could satisfy the ‘‘creditor-or- an aspect of proposed previously had used the email address prior-debt-collector-use’’ method of § 1006.6(d)(3)(i)(C),287 which, as to communicate with the consumer. obtaining a safe harbor only if, among discussed in the section-by-section To further reduce the risk of a third- other things, the debt collector used an analysis of final § 1006.6(d)(4)(iii), party disclosure when debt collectors email address to which the creditor or provided that a debt collector could use the notice-and-opt-out method, the a prior debt collector sent satisfy the ‘‘creditor-or-prior-debt- Bureau believes that it is important to communications about the debt, and the collector-use’’ method of obtaining a incorporate such a requirement into consumer did not ask the creditor or safe harbor only if, among other things, § 1006.6(d)(4)(ii). While any prior debt collector to stop. The Bureau the debt collector used an email address requirement that the email address had received a number of comments obtained from the consumer by the been used by the creditor to regarding those aspects of proposed creditor or a prior debt collector.288 In communicate with the consumer (even § 1006.6(d)(3)(i)(C), and those comments response to that proposed requirement, if only for advertising or marketing) have informed final a group of consumer advocate would help achieve this goal, the § 1006.6(d)(4)(ii)(B).290 commenters asked the Bureau to clarify Bureau determines that requiring the An industry commenter objected to how a creditor could obtain an email creditor to have used the email address requiring the creditor to have address from the consumer and how a to communicate with the consumer communicated ‘‘about the debt,’’ debt collector would know that a about the account reduces the risk of arguing that the requirement should be creditor had done so. There are many third-party disclosure even further. eliminated or broadened to include ways for a creditor to obtain an email Although the FDCPA recognizes that communications ‘‘about the account’’ address from a consumer for purposes of creditor communications are less because a creditor’s communications the notice-and-opt-out procedures in sensitive than debt collector with a consumer typically involve the § 1006.6(d)(4)(ii). For example, the communications, some creditor account rather than the debt. By creditor may request the email address communications, such as contrast, a group of consumer advocate communications about the account, are commenters argued the requirement 286 An industry commenter urged the Bureau to more sensitive than others, such as would not sufficiently protect create a safe harbor permitting the use of any email advertising or marketing consumers because it would not have address that has been ‘‘verified.’’ The commenter communications. The Bureau therefore required that the consumer actually did not define ‘‘verify’’ but noted that it is possible to obtain email addresses from commercially believes that a consumer’s willingness received or accessed the available databases. Because the Bureau currently to communicate electronically with a communications, or that the creditor or lacks information to evaluate the completeness and creditor about an account says more debt collector took any steps to confirm accuracy of such databases, the Bureau declines the about the risk of third-party disclosure the consumer’s receipt and access. In commenter’s suggestion to provide a safe harbor to a debt collector who ‘‘verifies’’ a consumer’s email should the account enter collections addition, the consumer advocate address using such a database. than a consumer’s willingness to receive commenters noted, any requirements 287 As discussed in the section-by-section analysis advertisements or marketing materials placed on creditors would not be of § 1006.6(d)(4)(iii), the Bureau is not finalizing electronically. Conversely, if a enforceable against creditors who were § 1006.6(d)(3)(i)(C) as proposed but, as here, is consumer has asked a creditor to stop not also FDCPA debt collectors. The incorporating aspects of that provision into the final notice-and-opt-out procedures. The Bureau using an email address to communicate commenters also argued that a therefore responds to certain comments made in response to § 1006.6(d)(3)(i)(C) in this section-by- 289 The Bureau notes that § 1006.6(d)(4)(ii) does 290 As discussed in the section-by-section analysis section analysis. not provide a safe harbor to a debt collector who of § 1006.6(d)(4)(iii), the Bureau is not finalizing 288 Unlike proposed § 1006.6(d)(3)(i)(C), final simply sends an email to an email address obtained § 1006.6(d)(3)(i)(C) as proposed but, as here, is § 1006.6(d)(4)(ii) does not cover a debt collector’s by the creditor at account opening. Instead, for a incorporating aspects of that provision into the final use of an email address obtained by a prior debt debt collector to obtain a safe harbor from civil notice-and-opt-out procedures. The Bureau collector. Safe harbor procedures covering a debt liability under § 1006.6(d)(4)(ii), the other therefore responds to certain comments addressing collector’s use of such an email address are found requirements of the notice-and-opt-out procedures § 1006.6(d)(3)(i)(C) in this section-by-section in final § 1006.6(d)(4)(iii). must be satisfied. analysis.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76783

consumer’s failure to request that the provide the consumer with notice and a commenters also noted in discussing creditor stop using a particular email reasonable opportunity to opt out of electronic communications generally, address is just as likely to mean that debt collection communications to that many consumers are suspicious of messages to that address had gone to the address. Accordingly, the final rule does communications from entities they do consumer’s spam folder or had reached not treat a consumer’s failure to exercise not know or recognize, such as debt the wrong person as to mean that the an undisclosed opt-out right as collectors. Consumers may ignore or consumer had assessed third-party implicitly authorizing a debt collector to delete such communications without disclosure risk to be low. In addition, send emails to that email address. opening them and may be reluctant to these commenters noted, a creditor is Regarding the requirement that the click on any links they contain, under no obligation to inform the consumer did not ask the creditor to including links to opt out of further consumer of the right or ability to opt stop using the address, one industry communications. Indeed, as the Bureau out of communications, so a consumer’s commenter suggested, without further noted in the proposal, several Federal failure to opt out should not implicitly explanation, that only a consumer’s agencies have warned consumers authorize a debt collector to send emails written request should suffice. The against clicking on links from unknown to that email address. Bureau declines the commenter’s senders.294 The Bureau determines that, given the suggestion; an oral request can suggest The Bureau recognizes, as industry multiple consumer protections built just as well as a written request that the commenters noted, that creditors will into the final notice-and-opt-out risk of third-party disclosure is high. incur a cost to send the opt-out notice. procedures to limit the likelihood of a For these reasons, the Bureau is Some creditors may absorb these costs third-party disclosure—including finalizing § 1006.6(d)(4)(ii)(B) as while others may seek to require debt requirements relating to the form and described above. collectors to absorb them. The Bureau content of the opt-out notice, as well as 6(d)(4)(ii)(C) notes, however, that debt collectors are who may deliver it and in what not required to follow the procedures in manner—it is not necessary to require As proposed, § 1006.6(d)(3)(i)(B)(1) § 1006.6(d)(4)(ii). A debt collector who the creditor to have used the email contained a number of requirements deems the procedures too expensive address to communicate about the debt, regarding the opt-out notice. The may use the other procedures in as distinguished from the account. Nor creditor or debt collector would have § 1006.6(d)(4) or operate outside of the does the Bureau believe it is necessary been required to notify the consumer safe harbor. As to the consumer to require that the consumer actually clearly and conspicuously, no more advocate commenter’s concern about received or was able to view the than 30 days before the debt collector enforceability, the Bureau reiterates that creditor’s communications, or that the sent its first email communication, that the final rule may be enforced against creditor took steps to confirm the the debt collector might use a particular FDCPA debt collectors.295 consumer’s receipt and access of those personal email address for such The Bureau agrees that consumers communications. Under communications. The creditor or debt may be reluctant to open emails from, § 1006.6(d)(4)(ii)(A), the email address collector also would have been required or click on hyperlinks in emails from, must have been obtained by the creditor to provide the notice other than through unknown or untrusted sources. from the consumer and is therefore the email address that the debt collector However, the Bureau determines that highly likely to belong to the consumer, planned to use for debt collection these concerns are less salient when a particularly because email addresses communications, and to describe how to written or electronic communication generally are not reassigned. Moreover, opt out. For the reasons discussed comes from a recognized entity with below, the Bureau is finalizing proposed a consumer who provides an email which the consumer has an ongoing § 1006.6(d)(3)(i)(B)(1), with address to a creditor is likely to expect relationship, such as a creditor who has modifications and additions, as final email communications about the communicated with the consumer. For § 1006.6(d)(4)(ii)(C) to provide that, account from the creditor and to follow these reasons, the Bureau is finalizing before a debt collector uses an email up should any expected § 1006.6(d)(4)(ii)(C) to provide that the address to communicate with a communications not arrive, diminishing consumer about a debt under 294 the risk that a creditor’s emails will be For example, the FTC advises consumers not § 1006.6(d)(4)(ii), the creditor must send blocked by a spam filter.291 In addition, to open links or attachments to emails they do not the consumer a written or electronic recognize, in order to prevent phishing and to the extent that the email address is notice that clearly and conspicuously malware. See Fed. Trade Comm’n, How to one for which the creditor has obtained discloses the information identified in Recognize and Avoid Phishing Scams (May 2019), consent under the E–SIGN Act, the https://www.consumer.ftc.gov/articles/how- § 1006.6(d)(4)(ii)(C)(1) through (5).293 recognize-and-avoid-phishing-scams; Fed. Trade creditor will already have confirmed the Comm’n, Malware (Nov. 2015), https:// consumer’s ability to access the Who May Provide the Opt-Out Notice www.consumer.ftc.gov/articles/0011-malware. The communications.292 Further, under Proposed § 1006.6(d)(3)(i)(B)(1) would FDIC offers consumers similar guidance. See Fed. § 1006.6(d)(4)(ii), a consumer’s failure to Deposit Ins. Corp., Beware of Malware: Think have permitted either the creditor or the Before You Click, https://www.fdic.gov/consumers/ opt out of a creditor’s past use of an debt collector to provide the opt-out consumer/news/cnwin16/malware.html (last email address does not, without more, notice. Several industry commenters updated Mar. 8, 2016). provide a safe harbor to a debt collector observed that a creditor who provides 295 Thus, if a debt collector relies on a creditor to who uses that email address; the the opt-out notice itself will incur costs take an action that a creditor does not actually take, creditor must, among other things, such as sending an opt-out notice in compliance to do so, while a group of consumer with § 1006.6(d)(4)(ii), the creditor generally would advocate commenters expressed not be liable under the rule. But the rule still may 291 The Bureau is not aware of evidence concern about enforcing the law against be enforced against the debt collector. For example, suggesting that creditor communications are creditors who provide the opt-out notice a consumer could allege that, to the extent the debt especially likely to be blocked by spam filters. Cf. collector’s procedures led it to rely on a creditor Gmail Help, Prevent Mail to Gmail Users From in a manner that violates the rule. As who did not send the opt-out notice, those Being Blocked or Sent to Spam, https:// procedures did not reasonably confirm and support.google.com/mail/answer/81126?hl=en (last 293 For clarity, the Bureau is finalizing the notice document that the debt collector communicated in visited Oct. 1, 2020) (identifying factors that trigger content requirements as § 1006.6(d)(4)(ii)(C)(1) accordance with § 1006.6(d)(4)(ii), and the debt Gmail’s spam filter). through (5) and addresses content-related collector is not entitled to a safe harbor from civil 292 See 15 U.S.C. 7001(c). comments in that section-by-section analysis. liability.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76784 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

creditor, and only the creditor, may group of consumer advocate Timing of Opt-Out Notice send the opt-out notice. commenters appeared to support To ensure that consumers could make How the Opt-Out Notice May Be delivery of the opt-out notice by mail their opt-out decisions at a time Provided only. According to these commenters, reasonably contemporaneous with telephone calls to consumers, potential electronic debt collection Proposed § 1006.6(d)(3)(i)(B)(1) would particularly telephone calls from debt not have permitted the creditor or the communications, proposed collectors, already involve multiple debt collector to send the notice to the § 1006.6(d)(3)(i)(B)(1) would have disclosures, and an opt-out notice specific email address the debt collector required the opt-out notice to be intended to use for future related to electronic debt collection provided no more than 30 days before communications. Consumer advocate communications may be missed by the debt collector engaged in debt commenters generally did not address consumers overwhelmed with other collection communications by email. this limitation. Several industry information. These commenters also Consumer advocate commenters commenters opposed it, arguing that it asserted that consumers would be generally did not address this effectively would require a debt unlikely to listen to opt-out messages requirement. A few industry collector to establish right-party contact delivered by robocall, and they commenters supported the requirement before providing the opt-out notice, expressed concern that an opt-out notice as proposed; others asked that the which could require multiple calls to delivered electronically might not be period be lengthened or eliminated the consumer. These commenters also seen at all, particularly if blocked by a altogether. One industry commenter argued that the limitation could be consumer’s spam filter. who called for eliminating the timing requirement argued that, once a debt is confusing to consumers, who are used Final § 1006.6(d)(4)(ii)(C) retains the to receiving emails and clicking on in collection, a consumer typically has requirement that the information in the unsubscribe links to stop future emails ignored the creditor for 120 or 180 days. opt-out notice be clear and conspicuous. to that email address, not to prevent According to this commenter, such a future emails to a different email In addition, final § 1006.6(d)(4)(ii)(C) consumer also is likely to ignore a address. requires that the notice be delivered in notice sent from the creditor or the debt The final rule does not include the writing or electronically, rather than collector, so the timing requirement requirement to send the opt-out notice orally (whether in a robocall or live would serve no purpose. Another other than to the email address the debt conversation).297 Requiring that the industry commenter argued that a collector intends to use. The purpose of notice be delivered in writing or timing requirement could interfere with this requirement was to prevent a third- electronically helps ensure that the mortgage servicing practice of party disclosure of the opt-out notice consumers can review the contents of sending Real Estate Settlement itself. That concern was more salient the notice while making their opt-out Procedures Act of 1974 (RESPA) 299- under the proposal, which would have decisions. The Bureau declines, required transfer-of-servicing letters, permitted debt collectors to send the however, to require that the opt-out also known as hello and goodbye letters, opt-out notice. Because only creditors notice be provided only by mail. The by email in some cases. This commenter may provide the opt-out notice under Bureau believes that the risk that a spam suggested that, as long as a consumer the final rule and because the opt-out filter might block an opt-out notice was has consented to receiving email notice may be sent only to an email of greater concern under the proposal, communications from a prior servicer, the final rule should allow a new address the creditor used to which would have permitted debt servicer to provide a hello letter by communicate with the consumer about collectors to send the opt-out notice. email if the email also includes the opt- the account, the Bureau believes that the Under the final rule, however, the opt- out notice. Industry commenters who proposed requirement is unnecessary in out notice can be provided only by the the final rule. The final rule does, asked the Bureau to extend the 30-day creditor, a known sender, to an email period generally argued that 30 days is however, require the creditor to send address the creditor used to the opt-out notice to an address the too little time for a creditor to send the communicate with the consumer about creditor obtained from the consumer consumer an opt-out notice and place the account, which should reduce the and used to communicate with the the account with a debt collector, and risk that an electronic notice would be for a debt collector to then process the consumer about the account. The 298 purpose of this requirement is to help flagged as spam. file for collections and send an ensure that the consumer receives the electronic communication. One such opt-out notice.296 297 Because § 1006.6(d)(4)(ii)(C), unlike proposed commenter asked the Bureau to adopt a § 1006.6(d)(3)(i)(B)(1), permits a creditor to send the 90-day period; another requested a 180- Form of Opt-Out Notice opt-out notice to the specific email address the debt collector intends to use for future communications, day period. Proposed § 1006.6(d)(3)(i)(B)(1) would the Bureau believes that there is less need to permit The Bureau determines that have required the creditor or the debt creditors to deliver the opt-out notice orally. consumers should receive the opt-out collector to provide clearly and 298 See, e.g., Google, Email Whitelists and notice at a time reasonably conspicuously the information in the Blacklists, https://support.google.com/a/answer/ contemporaneous with potential debt 60752?hl=en(last visited Oct. 4, 2020) (identifying opt-out notice. It also would have how users can block unknown senders); Yahoo!, collection communications. As permitted the notice to be provided Yahoo Mail Safety Guide, https://safety.yahoo.com/ discussed elsewhere, the Bureau orally, in writing, or electronically. SafetyGuides/Mail/index.htm (last visited Oct. 1, believes that a notice provided by the Industry commenters generally did 2020) (same); AOL, Manage Spam and Privacy in creditor at account opening would AOL Mail, https://help.aol.com/articles/aol-mail- not address these delivery issues. A spam-and-privacy (last visited Oct. 1, 2020) (same); generally not serve this goal because Cf. Cade Metz, Google Says Its AI Catches 99.9 years may pass, and a consumer’s 296 As noted above, nothing prohibits a creditor Percent of Gmail Spam, Wired, https:// circumstances may change, between the from sending the opt-out notice to the email address www.wired.com/2015/07/google-says-ai-catches-99- time the consumer opens an account the debt collector intends to use, and the Bureau 9-percent-gmail-spam/ (July 9, 2015) (noting that, in expects that, for convenience, most creditors who 2015, Google’s false positive rate for spam—i.e., and the time a debt enters collections. send the notice electronically will send it to that legitimate email misidentified as spam—was .05 email address. percent). 299 Public Law 93–533, 88 Stat. 1274 (1974).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76785

In light of industry commenters’ contain the legal name of the debt 6(d)(4)(ii)(C)(2) concerns, however, final collector to which the debt was being Proposed § 1006.6(d)(3)(i)(B)(1) would § 1006.6(d)(4)(ii)(C) does not contain a transferred. Commenters generally did have required the opt-out notice to specific timing requirement. Instead, as not address this requirement. contain the email address that the debt discussed in the section-by-section To harmonize the proposed collector proposed to use for debt analysis of § 1006.6(d)(4)(ii)(C)(1), the requirement with the final rule’s collection communications. The Bureau Bureau addresses the timing issue by approach that only the creditor may received no comments regarding this requiring the opt-out notice to identify provide the opt-out notice, and to requirement and is finalizing it as the debt collector to which the creditor address the timing concerns discussed § 1006.6(d)(4)(ii)(C)(2), which provides has transferred or will transfer the debt. that the opt-out notice must disclose the Creditors usually decide to whom they in the section-by-section analysis of § 1006.6(d)(4)(ii)(C), final email address and the fact that the debt will transfer a debt close to the time collector might use the email address to they transfer it, which, in turn, is likely § 1006.6(d)(4)(ii)(C)(1) retains the proposed requirement but modifies it to communicate with the consumer about to be reasonably contemporaneous with the debt. the potential debt collection provide that the opt-out notice must communication.300 disclose that the debt has been or will 6(d)(4)(ii)(C)(3) For the reasons discussed above, the be transferred to the debt collector. Proposed § 1006.6(d)(3)(i)(B)(1) would Bureau is finalizing § 1006.6(d)(4)(ii)(C), Comment 6(d)(4)(ii)(C)(1)–1 clarifies not have required the opt-out notice to which provides that a debt collector that, to satisfy this requirement, the opt- disclose that others with access to the may obtain a safe harbor from civil out notice must identify the name of the email address might see the debt liability for an unintentional third-party specific debt collector to which the debt collector’s communications. The Bureau disclosure if, among other things, before has been or will be transferred. believes that such a requirement would the debt collector used an email address The Bureau understands that most focus the consumer’s attention on the to communicate with the consumer creditors do not know the precise debt risk of third-party disclosure from debt about the debt, the creditor sent a collector to which they will transfer a collection communications and thereby written or electronic notice, to an debt until relatively close in time to the help to address consumer advocates’ address the creditor obtained from the transfer. Moreover, the Bureau believes concerns, discussed elsewhere, that a consumer and used to communicate that, even among creditors who use only consumer’s failure to opt out after with the consumer about the account, a single debt collector to collect their receiving the opt-out notice might not that clearly and conspicuously debts, or who otherwise know the reflect a consumer’s assessment of the disclosed the information listed in identity of a debt collector well in risk of a third-party disclosure. For this § 1006.6(d)(4)(ii)(C)(1) through (5). The reason, the Bureau is finalizing Bureau also is adopting new comments advance, many would not send the opt- out notice before the consumer has § 1006.6(d)(4)(ii)(C)(3) to provide that 6(d)(4)(ii)(C)–1 through –3 to clarify the opt-out notice must disclose that, if certain aspects of § 1006.6(d)(4)(ii)(C). become delinquent, because doing so could undermine the creditor’s others have access to the email address, Comment 6(d)(4)(ii)(C)–1 clarifies the then it is possible they may see the relationship with the consumer. In requirement to provide the notice emails. clearly and conspicuously.301 Comment addition, the Bureau anticipates that, to 6(d)(4)(ii)(C)–2 provides sample facilitate compliance with 6(d)(4)(ii)(C)(4) language that a creditor may use to recordkeeping obligations imposed by Proposed § 1006.6(d)(3)(i)(B)(1) would comply with § 1006.6(d)(4)(ii)(C). other consumer protection statutes and have required the opt-out notice to Comment 6(d)(4)(ii)(C)–3 clarifies that regulations, many creditors will choose describe one or more methods that the the opt-out notice may be contained in to send the opt-out notice close in time consumer could use to opt out. As a larger communication that conveys to the debt collector’s communication. proposed, a debt collector could have other information, as long as the notice The Bureau therefore finds that employed any opt-out method—even a is clear and conspicuous.302 § 1006.6(d)(4)(ii)(C)(1)’s requirement to potentially inconvenient one—as long identify a specific debt collector will 6(d)(4)(ii)(C)(1) as it was disclosed in the notice. While adequately ensure that the consumer commenters generally did not address Proposed § 1006.6(d)(3)(i)(B)(1) would receives the opt-out notice at a time this proposed requirement, the Bureau have required the opt-out notice to reasonably contemporaneous with the is finalizing it with modifications to proposed electronic communications, ensure that the burden of opting out 300 With respect to the industry commenter’s reducing the likelihood that the does not prevent or unduly hinder concern about sending transfer-of-servicing letters by email, the Bureau notes that § 1006.6(d)(4)(iii) consumer’s circumstances will have consumers who want to opt out from includes procedures that servicers can use in that changed by the time the debt collector doing so. situation. The Bureau is not adopting the communicates electronically. Specifically, final commenter’s suggested solution because, for the § 1006.6(d)(4)(ii)(C)(4) requires the opt- reasons discussed earlier in this section-by-section In addition, although consumers out notice to disclose instructions for a analysis, final § 1006.6(d)(4)(ii) requires the opt-out generally do not have pre-existing reasonable and simple method by which notice to come from the creditor. relationships with particular debt 301 This comment resembles proposed comment the consumer can opt out of a debt 6(d)(3)(i)(B)(1)–1, with modifications to reflect the collectors, it is possible that some collector’s use of the email address fact that the final rule does not permit a creditor consumers, particularly those with identified in the opt-out notice. A to deliver the opt-out notice orally. multiple debts in collection, may have reasonable-and-simple requirement, 302 Proposed comment 6(d)(3)(i)(B)(1)–3 would interacted with a particular debt have clarified that a debt collector or a creditor may which is also used in the Bureau’s include the opt-out notice in the same collector in the past. Requiring the Regulation V,303 should help to ensure communication as the opt-out notice described in creditor to identify the debt collector by that a consumer who wishes to opt out proposed § 1006.42(d)(1) or (2), as applicable. As name in the opt-out notice allows such is not deterred by the process of doing explained in the section-by-section analysis of final a consumer to make a more informed § 1006.42, the Bureau is not finalizing proposed so. Comment 6(d)(4)(ii)(C)(4)–1 provides § 1006.42(d). Accordingly, the Bureau is not choice about whether to opt out of adopting proposed comment 6(d)(3)(i)(B)(1)–3. electronic communications. 303 12 CFR 1022.25.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76786 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

illustrative examples of opt-out methods make it harder for consumers to enforce and the consumer must not have opted that satisfy the reasonable-and-simple their rights. out. Proposed comment 6(d)(3)(i)(B)(2)– standard. Accordingly, the final rule specifies 1 clarified that, notwithstanding the that the opt-out period must last at least expiration of the § 1006.6(d)(3)(i)(B)(2) 6(d)(4)(ii)(C)(5) 35 days from the date the opt-out notice opt-out period, a consumer would Proposed § 1006.6(d)(3)(i)(B)(1) would is sent. In deciding to finalize a 35-day remain free to request that a debt have required the opt-out notice to minimum opt-out period, the Bureau collector not use a particular email specify a reasonable period within concluded that, consistent with FDCPA address, or not communicate using which a consumer could opt out, but it section 809, which affords consumers email generally, under proposed did not define the term reasonable 30 days within which to exercise certain § 1006.14(h). For the reasons discussed period. statutory rights, consumers should be below, the Bureau is finalizing proposed Several industry commenters opposed afforded at least 30 days within which § 1006.6(d)(3)(i)(B)(2) as an opt-out period, arguing that a to inform the debt collector of a decision § 1006.6(d)(4)(ii)(D), largely as proposed consumer who provided electronic to opt out. The Bureau included an but with non-substantive changes to contact information to a creditor at additional five days to account for the reflect the revised organization and account opening has decided to time it might take an opt-out notice to terminology in the final rule. The 307 Bureau also is adopting new communicate electronically and, for reach a consumer by mail. commentary for clarity and in response these consumers, an opt-out period For the reasons discussed above, the Bureau is finalizing to feedback. would only delay the use of electronic First, an industry commenter raised a communications. Other industry § 1006.6(d)(4)(ii)(C)(5), which requires the opt-out notice to disclose the date by possible implementation issue regarding commenters warned that failing to proposed § 1006.6(d)(3)(i)(B)(2), define the term reasonable period would which the debt collector or the creditor must receive the consumer’s request to observing that, given the time necessary create legal uncertainty and litigation for an opt-out notice to reach a risk, thereby discouraging use of the safe opt out, which must be at least 35 days after the date the notice is sent. The consumer and for the consumer to harbor and, in turn, electronic notify a debt collector of a decision to communications in debt collection. Bureau may consider changing the 35- day period in the future based on actual opt out, a debt collector acting in good These commenters suggested opt-out faith may risk communicating with the periods ranging between five and 14 stakeholder experience with this provision.308 The Bureau also is consumer after the opt-out period ends days, variously noting that almost all but before receiving the consumer’s requests to opt out would be received adopting new comment 6(d)(4)(ii)(C)(5)– 1 to clarify that the opt-out notice may request to opt out. The commenter within the first week, that the CAN– urged the Bureau to address this issue SPAM Act requires covered entities to instruct the consumer to respond to the debt collector or to the creditor but not by creating a bright-line rule allowing process email opt-out requests within 10 for communication up to 45 days after days,304 and that mortgage servicers to both. The comment is meant to provide creditors and debt collectors the opt-out period ends. must provide consumers at least 14 days The Bureau believes that the with the flexibility to decide among to respond to an offer of loss mitigation commenter’s proposed solution entails themselves who will be responsible for in certain circumstances under the an unnecessarily prolonged risk of 305 receiving and processing opt-out Bureau’s mortgage servicing rules. A third-party disclosure. After the opt-out requests, and to design the opt-out group of consumer advocate period ends, a debt collector who sends process accordingly.309 commenters also urged the Bureau to an email to an email address pursuant define the term reasonable period, 6(d)(4)(ii)(D) to the procedures in § 1006.6(d)(4)(ii) suggesting that an opt-out period of Proposed § 1006.6(d)(3)(i)(B)(2) remains within the safe harbor unless fewer than 30 days could result in and until the debt collector receives the consumer confusion given the 30-day provided that, for a debt collector to obtain a safe harbor from civil liability consumer’s request to opt out of emails validation period required by FDCPA to that email address. Once the debt section 809.306 under the notice-and-opt-out method, the opt-out period must have expired, collector receives such a request, future The Bureau declines the suggestion to emails to that email address would not 310 eliminate the opt-out period altogether. 307 The Bureau recognizes that, if a creditor sends be protected by the safe harbor. As explained in the section-by-section the opt-out notice by email, a consumer might Second, a group of consumer advocate analysis of § 1006.6(d)(4)(i), a receive it instantaneously and read it soon commenters requested that the Bureau consumer’s decision to communicate thereafter. The Bureau notes, however, that some revise proposed comment consumers, particularly those with limited internet electronically with a creditor does not, access, do not check email regularly. Accordingly, 6(d)(3)(i)(B)(2)–1 to clarify that without more, suggest that the risk of a 35-day minimum period applies no matter how consumers can, even after the expiration third-party disclosure is particularly the opt-out notice is delivered. low. However, the Bureau agrees with 308 The Bureau recognizes that the information in 310 Moreover, future emails to that address would industry and consumer advocate a validation notice is more extensive than the be covered by § 1006.14(h), which prohibits information in the opt-out notice, and that a communicating or attempting to communicate with commenters about the need to define consumer’s decision about how to engage with a a person through a medium of communication if the the opt-out period more clearly. Leaving debt collector in response to a validation notice person has requested that the debt collector not use the period undefined, or relying on a may be more complex than a consumer’s decision that medium to communicate with the person. See reasonableness requirement, could about whether to communicate with a debt collector the section-by-section analysis of § 1006.14(h) and using a particular email account. comment 14(h)(1)–1. Section 1006.14(h) would create legal uncertainty that could 309 Proposed comment 6(d)(3)(i)(B)(1)–2 would apply regardless of when the debt collector receives hamper the use of electronic have clarified that, if a creditor or a debt collector the consumer’s request to opt out, i.e., whether communications in debt collection and provides the opt-out notice orally, the creditor or before or after the opt-out period ends. A debt the debt collector may require the consumer to collector who sends an email to an email address make an opt-out decision during that same after receiving a consumer’s request to opt out 304 15 U.S.C. 7704(a)(4)(A); see also 84 FR 13115, communication. Because final § 1006.6(d)(4)(ii) under § 1006.6(d)(4)(ii) but before processing that 13118 (Apr. 4, 2019). does not permit oral delivery of the opt-out notice, request may have a bona fide error defense to civil 305 12 CFR 1024.41(e). the Bureau is not finalizing proposed comment liability under FDCPA section 813(c) with respect 306 15 U.S.C. 1692g. 6(d)(3)(i)(B)(1)–2. to unintentional violations of § 1006.14(h).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76787

of the opt-out period: (1) opt out of the employer-provided email address after In addition, several industry debt collector’s use of an email address receiving an opt-out notice may not commenters argued that, although the pursuant to § 1006.6(e); 311 and (2) cease indicate that the consumer has assessed Bureau based its proposal to exclude communication under § 1006.6(c)(1).312 the risk of third-party disclosure to be employer-provided email addresses The Bureau is finalizing proposed low.313 from the safe harbor on its belief that comment 6(d)(3)(i)(B)(2)–1 as comment Consumer advocate commenters many employers have the right to 6(d)(4)(ii)(D)–1, with revisions to generally supported the Bureau’s monitor emails received on employer- provided accounts, the Bureau incorporate these suggestions. proposal to exclude employer-provided Finally, industry commenters presented no evidence justifying that email addresses from the proposed requested that the Bureau clarify belief. Relatedly, an industry notice-and-opt-out procedures, while whether a debt collector should treat a commenter argued that the Bureau’s industry commenters generally opposed consumer’s request to opt out as a concern about employer monitoring is it. Many industry commenters raised request to cease communication under misplaced because a personal email operational concerns, stating that there § 1006.6(c)(1). A consumer’s request to account may be monitored by a is generally no way to know whether an opt out in response to an opt-out notice consumer’s commercial email provider. email address is employer provided. that identifies a particular email address Industry commenters also argued that These commenters stated that no to which debt collection other proposed rule provisions—such as database of employer-provided email communications may be sent is the requirement in proposed § 1006.6(e) addresses exists, and that reviewing generally not a request to opt out of all to include, in all electronic domain names is a labor-intensive and communications. Accordingly, new communications, instructions for opting manual process, as well as insufficient comment 6(d)(4)(ii)(D)–2 clarifies that, out of such communications—would to determine whether an address is in the absence of evidence that the sufficiently protect consumers who employer provided. For example, an consumer refuses to pay the debt or receive unwanted emails on employer- ‘‘.edu’’ domain name may indicate that wants the debt collector to cease all provided accounts. a consumer is either a student or an communication with the consumer, a As the Bureau noted in the proposal, employee of an educational institution. consumer’s request to opt out under many employers have a legal right to According to these commenters, because § 1006.6(d)(4)(ii)(D) is not a request to read, and frequently do read, messages it is difficult to distinguish employer- cease all communication with respect to sent or received by employees on provided email addresses from personal the debt under § 1006.6(c)(1). employer-provided email accounts.314 ones, excluding employer-provided The Bureau disagrees that a debt email addresses from the notice-and- 6(d)(4)(ii)(E) collector who sends an email to an opt-out procedures would create an The notice-and-opt-out procedures in employer-provided email address implementation problem that would proposed § 1006.6(d)(3)(i)(B) would not should be entitled to a safe harbor from discourage debt collectors from using have covered a debt collector who knew civil liability as long as the consumer the procedures, thus stifling electronic or should have known that the email provided that address to the creditor. As communications and harming address to which the debt collector sent discussed in the section-by-section consumers. an email was provided by the analysis of § 1006.6(d)(4)(i), a consumer’s employer. In support of this In addition to these operational consumer’s decision to communicate by proposed limitation, the Bureau concerns, industry commenters noted email with a creditor does not, without explained that employer-provided email that consumers often disclose employer- more, suggest that the risk of third-party addresses present a heightened risk of provided email addresses to creditors, disclosure is particularly low should a third-party disclosure because many including on account-opening debt collector send an email to the same employers have a legal right to read documents. According to these email address. Although the Bureau messages sent and received by commenters, a consumer who has agrees that proposed § 1006.6(e)—which employees on employer-provided email disclosed an employer-provided email the Bureau is finalizing largely as accounts, and some employers exercise address to a creditor has chosen to proposed in final § 1006.6(e)—would that right. The Bureau expressed communicate about the account by help limit the risk of third-party concern that, unlike a consumer’s email, and that choice should be disclosure by enabling consumers to opt affirmative decision to contact a debt honored even after the account is collector using an employer-provided transferred to a debt collector. 314 See 84 FR 23274, 23324 n.357 (May 21, 2019) email address, a consumer’s failure to Conversely, these commenters argued, a (citing Am. Mgmt. Ass’n & ePolicy Inst., Electronic opt out of a debt collector’s use of an consumer who does not want to receive Monitoring and Surveillance 2007 Survey (2008), http://www.epolicyinstitute.com/2007-survey- debt collection communications on an results (reporting that a survey of employers 311 Section 1006.6(e) requires a debt collector who employer-provided email account can conducted in 2007 found that, among other things, communicates or attempts to communicate with a decline to provide the creditor with 43 percent of employers monitored their employees’ consumer electronically in connection with the such an email address. email accounts and 66 percent of employers collection of a debt using a specific email address, monitored their employees’ internet connection, telephone number for text messages, or other with 45 percent of employers tracking the content, electronic-medium address to include in such 313 Proposed § 1006.22(f)(3) would have keystrokes, and time spent at the keyboard); communication or attempt to communicate a clear prohibited a debt collector from communicating or Bingham v. Baycare Health Sys., No. 8:14–CV–73– and conspicuous statement describing a reasonable attempting to communicate with a consumer using T–23JSS, 2016 WL 3917513, at *4 (M.D. Fla. July and simple method by which the consumer can opt an email address that the debt collector knew or 20, 2016) (collecting cases and concluding that ‘‘the out of further electronic communications or should have known was provided to the consumer majority of courts have found that an employee has attempts to communicate by the debt collector to by the consumer’s employer, unless the debt no reasonable expectation of privacy in workplace that address or telephone number. collector received directly from the consumer either emails when the employer’s policy limits personal 312 Section 1006.6(c)(1) prohibits a debt collector prior consent to use that email address or an email use or otherwise restricts employees’ use of its from communicating or attempting to communicate from that email address. As discussed in the system and notifies employees of its policy’’)); see further with a consumer with respect to a debt if section-by-section analysis of final § 1006.22(f)(3), generally Andrew Milam Jones, Employee the consumer notifies the debt collector in writing the Bureau is finalizing that provision with Monitoring: An Overview of Technologies, that the consumer refuses to pay the debt or the modifications. A debt collector who sends an email Treatment, and Best Practices, 83 Tx. B.J. 98 (2020); consumer wants the debt collector to cease further in conformity with § 1006.6(d)(4)(ii) complies with Shawn Marie Boyne, Data Protection in the United communication with the consumer. § 1006.22(f)(3). States, 66 Am. J. Comp. L. 299, 313–14 (2018).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76788 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

out of electronic communications easily, presents a practical challenge for debt use by the general public when multiple the Bureau notes that the protection collectors. The Bureau is aware of no members of the general public are afforded by § 1006.6(e) is effective only database of employer-provided email permitted to use the same domain name, after the debt collector has sent an email addresses that debt collectors can whether for free or through a paid to the consumer and the consumer’s consult, and reviewing domain names subscription. Such a name includes, for privacy interest has already been will not always answer whether an example, [email protected] and compromised. email address is personal or employer [email protected]. Such a name does As for the observation that a personal provided. The Bureau finds, however, not include one that is reserved for use email account may be monitored or that most employer-provided email by specific registrants, such as a domain scanned by a commercial email addresses have domain names that are name branded for use by a particular provider, the Bureau believes that not available to the general public and commercial entity (e.g., john.doe@ monitoring by an employer is that it is relatively straightforward for a springsidemortgage.com) or reserved for distinguishable from monitoring or debt collector to distinguish domain particular types of institutions (e.g., scanning by a non-employer email names that are publicly available from [email protected], john.doe@ provider. Congress and the courts have those that are not. The Bureau also finds university.edu, or john.doe@ recognized that a consumer may suffer that, if employer-provided email nonprofit.org). Comment 6(d)(4)(ii)(E)–2 significant harm, including loss of addresses have domain names that are clarifies that, for purposes of employment, if an employer learns that publicly available, it will be difficult § 1006.6(d)(4)(ii)(E), a debt collector the consumer has a debt in (absent actual knowledge) for a debt knows that an email address is provided collection.315 Although some collector to distinguish such an email by the consumer’s employer if any commercial email providers monitor or address from a personal one. person has informed the debt collector scan consumer email accounts to deliver For these reasons, the Bureau is that the address is employer provided. targeted advertisements or services finalizing § 1006.6(d)(4)(ii)(E) to Comment 6(d)(4)(ii)(E)–2 further through associated applications,316 this maintain the exclusion of most clarifies that § 1006.6(d)(4)(ii)(E) does type of activity generally does not employer-provided email addresses not require a debt collector to conduct threaten a consumer’s employment or from the notice-and-opt-out safe harbor, a manual review of consumer email reputation in the same way. but also to clarify how debt collectors addresses to determine whether an The Bureau recognizes that can distinguish between employer- email address might be employer distinguishing between employer- provided and personal email addresses provided. provided and personal email addresses for purposes of satisfying the safe harbor. Specifically, § 1006.6(d)(4)(ii)(E) 6(d)(4)(iii) Procedures Based on 315 S. Rep. No. 382, supra note 52, at 1699 (‘‘[A] provides that a debt collector may Communication by the Prior Debt debt collector may not contact third persons such obtain a safe harbor from civil liability Collector as a consumer’s friends, neighbors, relatives, or employer. Such contacts are not legitimate for an unintentional third-party Proposed § 1006.6(d)(3)(i)(C) (the collection practices and result in serious invasions disclosure if, among other things, the ‘‘creditor-or-prior-debt-collector-use’’ of privacy, as well as the loss of jobs.’’); id. at 1696 debt collector communicated by sending method) provided that a debt collector (‘‘Collection abuse takes many forms, including an email to an email address with a could obtain a safe harbor from civil . . . disclosing a consumer’s personal affairs to friends, neighbors, or an employer.’’); 122 Cong. domain name that is available for use by liability for an unintentional third-party Rec. H730707 (daily ed. July 19, 1976) (remarks of the general public, unless the debt disclosure if, in addition to complying Rep. Annunzio on H. Rep. No. 13720) collector knows the address is provided with § 1006.6(d)(3)(ii), the debt collector (Clearinghouse No. 31,059U) (‘‘Communication by the consumer’s employer. The maintained procedures to reasonably with a consumer at work or with his employer may work a tremendous hardship for a consumer Bureau believes that § 1006.6(d)(4)(ii)(E) confirm and document that: (1) The debt because such calls can embarrass a consumer and effectively excludes most employer- collector communicated with the can result in his losing a deserved promotion’’ and provided email addresses from the consumer using a personal email ‘‘[i]f a consumer loses his job, he is in a worse, not notice-and-opt-out safe harbor, thereby address that the creditor or a prior debt better, position to pay the debt.’’); Am. Fin. Servs. Ass’n v. Fed. Trade Comm’n, 767 F.2d 957, 974 largely avoiding the third-party collector obtained from the consumer to (D.C. Cir. 1985) (upholding provision in the FTC’s disclosure risks associated with such communicate about the debt; (2) the Credit Practices Rule that prohibited certain wage addresses while imposing a manageable creditor or the prior debt collector assignments because, among other things, the operational burden on debt collectors. rulemaking record showed that ‘‘employers tend to recently sent communications about the view the consumer’s failure to repay the debt as a To the extent a debt collector regards debt to that email address; and (3) the sign of irresponsibility. As a consequence, many the limitation in § 1006.6(d)(4)(ii)(E) as consumer did not ask the creditor or the lose their jobs after wage assignments are filed. overbroad—because, for example, it prior debt collector to stop such Even if the consumer retains the job, promotions, does not cover a debt collector who 317 raises, and job assignments may be adversely communications. affected.’’) (citing Credit Practices Rule, 49 FR 7740, sends an email to an ‘‘.edu’’ address— Many consumer advocate commenters 7758 (Mar. 1, 1984) (codified at 16 CFR 444)); Fed. the Bureau reiterates that a debt opposed proposed § 1006.6(d)(3)(i)(C) Trade Comm’n v. LoanPointe, LLC, No. 2:10–CV– collector may communicate by email on the ground that, when consumers 225DAK, 2011 WL 4348304, at *6–8 (D. Utah Sept. without following the procedures in provide email addresses to creditors, 16, 2011) (holding that ‘‘Defendants’ practice of disclosing debts and the amount of the debts to § 1006.6(d)(4)(ii). Such a debt collector they typically do not think about the consumers’ employers’’ violated the FDCPA and would, however, lose the protection of ‘‘qualifies as an unfair practice under the FTC the safe harbor (unless the debt 317 As noted, proposed § 1006.6(d)(3)(i)(C) would Act’’), aff’d, 525 F. App’x 696 (10th Cir. 2013). collector’s use of the email address have applied to both email addresses and telephone 316 See, e.g., Jack Schofield, What’s the Best Email otherwise satisfies the requirements of numbers, but final § 1006.6(d)(4)(iii) applies only to Service That Doesn’t Scan Emails for Ad Targeting, email addresses. This section-by-section analysis The Guardian (Apr. 19, 2018), https:// § 1006.6(d)(3)). therefore addresses proposed § 1006.6(d)(3)(i)(C) www.theguardian.com/technology/askjack/2018/ The Bureau also is adopting new only with respect to comments that specifically apr/19/whats-the-best-email-service-that-doesnt- comments 6(d)(4)(ii)(E)–1 and –2 to discussed email addresses, or that did not scan-emails-for-ad-targeting; cf. Daisuke clarify certain aspects of final distinguish between email addresses and telephone Wakabayashi, Google Will No Longer Scan Gmail numbers. Comments received in response to for Ad Targeting, N.Y. Times (June 23, 2017), § 1006.6(d)(4)(ii)(E). Comment proposed § 1006.6(d)(3)(i)(C) that discussed https://www.nytimes.com/2017/06/23/technology/ 6(d)(4)(ii)(E)–1 clarifies that the domain telephone numbers are addressed in the section-by- gmail-ads.html. name of an email address is available for section analysis of § 1006.6(d)(5).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76789

possibilities that they will fail to make unintentional third-party disclosure.319 adopting new comment 6(d)(4)(iii)–1 to payments, that the account will be Second, like the proposal, the final rule clarify that, for purposes of transferred to a debt collector, and that requires that a prior debt collector § 1006.6(d)(4)(iii), the immediately prior the debt collector will use the email actually have communicated with the debt collector is the debt collector address to communicate electronically. consumer about the debt using the email immediately preceding the current debt In addition, these commenters noted, address the current debt collector collector. The Bureau also is adopting years may pass, and a consumer’s intends to use.320 However, unlike the new comment 6(d)(4)(iii)–2 to provide circumstances may change, between the proposal, a safe harbor is available examples illustrating the rule. time a consumer provides an email under § 1006.6(d)(4)(iii) only if the 6(d)(5) Procedures for Telephone address to a creditor and the time a debt immediately prior debt collector—i.e., Numbers for Text Messages collector uses that email address to try the debt collector immediately to collect a debt. Thus, according to preceding the current one—used the As noted above, the final rule these commenters, a consumer’s email address to communicate with the reorganizes proposed § 1006.6(d)(3)(i) decision to provide an email address to consumer about the debt. A consumer’s by separating email procedures and text a creditor says little about the risk of personal circumstances may change message procedures. Final § 1006.6(d)(5) third-party disclosure if a debt collector over time, and limiting describes the procedures that a debt uses that email address at some later § 1006.6(d)(4)(iii) to email addresses collector may use to obtain a safe harbor date, and a debt collector who followed used by the immediately prior debt from civil liability for an unintentional the procedures in proposed collector decreases this risk in some third-party disclosure when § 1006.6(d)(3)(i)(C) could not claim that circumstances. Third, the final rule communicating by text message. The it lacked reason to anticipate a third- requires that, for a debt collector to final text message procedures are party disclosure. The Bureau agrees obtain a safe harbor from civil liability discussed in detail in the section-by- with these concerns and notes that there under § 1006.6(d)(4)(iii), the consumer section analysis of § 1006.6(d)(5)(i) and are other reasons why a consumer might must not have asked the immediately (ii). provide an email address to a creditor prior debt collector to stop using the Proposed Provisions Not Finalized but not to a debt collector. For example, email address for debt collection a consumer may conclude that the communications. The proposal identified opt-out potential risk to a creditor’s reputation Accordingly, final § 1006.6(d)(4)(iii) procedures (proposed and the potential risk of losing the provides that a debt collector may § 1006.6(d)(3)(i)(B)) and creditor-and- consumer as a customer—risks that may obtain a safe harbor from civil liability prior-debt-collector-use procedures not exist, or that may exist to a lesser for an unintentional third-party (proposed § 1006.6(d)(3)(i)(C)) that a extent, for debt collectors—constrain the disclosure when sending an email to an debt collector could use to reduce the creditor from misusing the email email address if: (1) Any prior debt risk of liability for an unintentional address. The Bureau therefore declines collector obtained the email address in third-party disclosure when sending to finalize a safe harbor based solely on accordance with § 1006.6(d)(4)(i) or (ii); emails or text messages to a consumer. the creditor’s prior use of an email (2) the immediately prior debt collector The Bureau is not finalizing either set of address.318 For the reasons discussed used the email address to communicate procedures as to text messages. below, however, the Bureau is finalizing with the consumer about the debt; and As discussed in the section-by-section other aspects of proposed (3) the consumer did not opt out of such analysis of § 1006.6(d)(5)(i), the practice § 1006.6(d)(3)(i)(C), with revisions, as communications.321 The Bureau is of reassigning telephone numbers § 1006.6(d)(4)(iii). increases the risk of third-party First, like the proposal, the final rule 319 Section 1006.6(d)(4)(ii), as noted, does not disclosure when a debt collector sends provides a debt collector in certain protect a debt collector who uses an email address a text message to a telephone number. that a debt collector knows is provided by a The Bureau determines that the text circumstances with a safe harbor from consumer’s employer. Section 1006.6(d)(4)(iii) does civil liability for an unintentional third- not include a similar prohibition. This is because message procedures it is finalizing in party disclosure when sending an email a condition of § 1006.6(d)(4)(iii) is that the § 1006.6(d)(5)(i) and (ii)—which, as to an email address obtained and used consumer not have opted out of the immediately explained below, resemble an opt-in prior debt collector’s use of the particular email by a prior debt collector. However, address, a factor that, when satisfied, suggests that approach—address the risk posed by unlike the proposal, a safe harbor is the risk of third-party disclosure is low if the later reassignment comprehensively. The available under § 1006.6(d)(4)(iii) only if debt collector uses the email address. Therefore, a Bureau will monitor debt collectors’ use later debt collector may obtain a safe harbor from of the text message procedures in the debt collector uses an email address civil liability under § 1006.6(d)(4)(iii) even if it obtained by a prior debt collector in knows that the consumer’s email address is § 1006.6(d)(5) and may revisit at a later accordance with either § 1006.6(d)(4)(i) employer provided. date whether additional procedures, or (ii). As already discussed, the Bureau 320 The final rule eliminates the proposed recency including procedures similar to those in requirement for the same reasons discussed in the final § 1006.6(d)(4)(ii) and (iii), can be determines that an email address section-by-section analysis of § 1006.6(d)(4)(i)(A). obtained by a debt collector pursuant to 321 As noted in the section-by-section analysis of designed to address the risk of third- the procedures in § 1006.6(d)(4)(i) or (ii) § 1006.6(d)(4)(ii)(C), an industry commenter party disclosure. Although the Bureau is presents a relatively low risk of expressed concern about how the procedures apply not finalizing notice-and-opt-out or to the mortgage servicing practice of sending prior-use safe harbor procedures for text RESPA-required transfer-of-servicing letters, also 318 As discussed in the section-by-section analysis known as hello and goodbye letters, by email. If a messages, the Bureau notes that the final of § 1006.6(d)(4)(ii), however, the Bureau is mortgage servicer who is an FDCPA debt collector rule does not prohibit debt collectors strengthening the final notice-and-opt-out sends such a hello letter, the debt collector may, from communicating with consumers by procedures by incorporating aspects of proposed under § 1006.6(d)(4)(iii), obtain a safe harbor from § 1006.6(d)(3)(i)(C) into them, including by civil liability for an unintentional third-party text message outside of the safe harbors. requiring the creditor to send the notice to an email disclosure if the debt collector sends the letter to 6(d)(5)(i) address obtained from the consumer and used to an email address that any prior debt collector communicate about the account. The Bureau obtained in accordance with § 1006.6(d)(4)(i) or (ii), As proposed, § 1006.6(d)(3)(i)(A) (the discusses those aspects of proposed the immediately prior debt collector used the email ‘‘consumer-use’’ method) for text § 1006.6(d)(3)(i)(C), and public comments related to address to communicate with the consumer, and them, where relevant in the section-by-section the consumer did not opt out of such messages provided that a debt collector analysis of § 1006.6(d)(4)(ii). communications. could obtain a safe harbor from civil

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76790 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

liability for an unintentional third-party the debt collector not to engage in such number to communicate with the debt disclosure if, in addition to complying communications. collector about the debt. Accordingly, with § 1006.6(d)(3)(ii), the debt collector An industry commenter and a group § 1006.6(d)(5)(i) does not cover a debt maintained procedures to reasonably of consumer advocate commenters collector who sends a text message to a confirm and document that the debt asked whether the proposed consumer- consumer after receiving a text message collector sent a text message to the use method—which would have from the consumer asking ‘‘Who is this? consumer using a telephone number provided a safe harbor for text messages What is this about? Please text me that the consumer recently used to sent to a telephone number that the back.’’ contact the debt collector for purposes consumer had used ‘‘to contact’’ the The Bureau received numerous other than opting out of electronic debt collector—would protect a debt comments regarding proposed communications.322 As discussed collector who sent a text message to a § 1006.6(d)(3)(i)(A)’s recency below, the Bureau is finalizing the telephone number that the consumer requirement, i.e., the requirement that proposed consumer-use method for text had used to call (but not to text) the debt the consumer have recently used the messages as § 1006.6(d)(5)(i), with collector. The group of consumer telephone number to contact the debt modifications and additions to address advocate commenters argued that a call collector. As discussed in the section- comments received, and with revisions from a telephone number does not by-section analysis of § 1006.6(d)(4)(i), for clarity. invite a text message to that number, multiple industry, consumer, and The Bureau based the proposed while the industry commenter simply consumer advocate commenters consumer-use procedures for text asked for clarification. Because a confirmed the Bureau’s understanding, as discussed in the proposal, that messages on the same assumption as the consumer who places a telephone call to telephone numbers are regularly proposed consumer-use procedures for a debt collector generally can control reassigned. Consumer advocate email addresses, i.e., that a debt who listens to the conversation by commenters thus generally supported collector may not have a reason to initiating or engaging in the call in applying the recency requirement to anticipate a third-party disclosure when private, the Bureau does not believe that telephone numbers, and industry sending a text message to a telephone a consumer’s decision to call a debt commenters generally did not oppose number that the consumer recently used collector, without more, generally doing so. to communicate with the debt collector. suggests that the risk of third-party disclosure is low if the debt collector Consumer advocate and industry The Bureau reasoned that, as with email commenters both argued, however, that addresses, consumers generally are sends a text message to the same telephone number. Therefore, the text of the Bureau should define the term better positioned than debt collectors to ‘‘recently,’’ with consumer advocates determine if third parties have access to § 1006.6(d)(5)(i), and new comment 6(d)(5)(i)–1, clarify that the consumer- noting that a definition would better a particular telephone number for text protect consumers and industry messages.323 use method for text messages does not apply if the consumer only used the commenters noting that failing to define Feedback from industry and telephone number to communicate with the term would create unnecessary consumer advocate commenters the debt collector about the debt by litigation risk. A consumer advocate regarding the Bureau’s reasoning was telephone call. commenter urged the Bureau to define similar to feedback regarding the An industry commenter asked recent as within the past 30 days to consumer-use procedures for email whether, under the proposed consumer- reflect the month-to-month nature of addresses, with industry generally use method, a debt collector would be many pay-as-you-go mobile telephone supporting the Bureau’s reasoning and protected from liability when plans. This commenter also expressly consumer advocates generally opposing responding to a consumer by text opposed defining recent as within the it for the reasons discussed in the message if, after attempting to past year, arguing that a period of this section-by-section analysis of communicate with the consumer by length fails to recognize that low- § 1006.6(d)(4)(i). Also for the reasons telephone, the debt collector received a income consumers in financial crisis discussed in that section-by-section text message from the consumer asking may change telephone numbers analysis, the Bureau determines that a ‘‘Who is this? What is this about? Please multiple times in a single year. Some industry commenters argued that 30 debt collector who sends a text message text me back.’’ The Bureau determines days would adequately protect to a telephone number that the that a consumer who responds to a consumers while allowing debt consumer has used to communicate missed telephone call by sending a text collectors sufficient time to respond to with the debt collector by text message message asking ‘‘who is this? what is consumer inquiries. A few industry generally would lack reason to this about?’’ and requesting a return text commenters argued in favor of 60 days anticipate a third-party disclosure. message likely does not know that the without explaining their reasoning, and However, for the reasons discussed in underlying communication or attempted § 1006.14(h)(1), a debt collector could others supported a one-year period. communication was from a debt As discussed in the proposal, and as not continue to use a telephone number collector or related to a debt. Such a for text messages if the consumer asked confirmed by commenters, millions of request therefore would not, without telephone numbers are disconnected more, suggest that the risk of third-party 322 and made available for reassignment Proposed § 1006.6(d)(3)(i)(A) would have disclosure is low if the debt collector applied to both email addresses and telephone each year, increasing the risk of third- 324 numbers for text messages, but final responded by text message. For this party disclosure when a debt collector § 1006.6(d)(5)(i) only applies to telephone numbers reason, the Bureau is finalizing the sends a text message.325 For this reason, for text messages. This section-by-section analysis consumer-use method for text messages the Bureau is finalizing a recency therefore addresses proposed § 1006.6(d)(3)(i)(A) with a clarification that it applies only only with respect to comments that specifically requirement as part of the consumer-use discussed text messages. Comments received in if the consumer used the telephone response to proposed § 1006.6(d)(3)(i)(A) that 325 See 84 FR 23274, 23301 (May 21, 2019) discussed email addresses are addressed in the 324 Nothing in the final rule prohibits a debt (noting that, according to a 2018 FCC notice of section-by-section analysis of § 1006.6(d)(4)(i). collector from communicating by text message in proposed rulemaking, 35 million telephone 323 See the section-by-section analysis of this scenario, although the Bureau notes that the numbers are disconnected and made available for § 1006.6(d)(4)(i). prohibition in § 1006.6(d)(1) would apply. reassignment each year).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76791

method for text messages. The Bureau the telephone number using a third- that, for purposes of the consumer-use agrees with commenters that the final party database.327 procedures, the FCC’s Reassigned rule should better define what The FCC has observed that, although Numbers Database qualifies as a constitutes ‘‘recently.’’ In this regard, commercial databases currently exist to complete and accurate database,333 as the Bureau notes that the FCC has help callers determine whether a does any commercially available established a 45-day minimum aging telephone number has been reassigned, database that is substantially similar in period and a 90-day maximum aging these databases are not terms of completeness and accuracy to 328 period for telephone number comprehensive. For this reason, in the FCC’s Reassigned Numbers December 2018, the FCC announced the reassignments.326 In other words, no Database.334 The Bureau recognizes that, creation of a new database to serve as fewer than 45 days and no more than 90 as a result of technological a single, comprehensive source for days may pass between the time a determining whether a telephone developments, debt collectors and carrier disconnects a telephone number number has been reassigned.329 The others may develop new methods to and the time it reassigns the number to purpose of the database, known as the confirm whether a telephone number a new consumer. The Bureau does not Reassigned Numbers Database, is to has been reassigned, some of which may have reason to believe that a significant help curb the proliferation of unwanted offer a level of certainty comparable to number of consumers have their telephone calls directed to reassigned consulting a complete and accurate telephone numbers disconnected the telephone numbers.330 Once database. The Bureau will monitor the same day they contact a debt collector. operational, the database will contain market for any such developments and Accordingly, the Bureau believes that reassigned number information from consider whether to modify or expand basing the text message recency each provider that obtains North the text message safe harbor procedures requirement on the 45-day minimum- American Numbering Plan U.S. in the future. aging period would be unnecessarily geographic numbers and toll-free For the reasons discussed above, the restrictive. At the same time, because all numbers.331 Users will be able to Bureau is finalizing § 1006.6(d)(5)(i), disconnected telephone numbers must consult the database to determine which provides that a debt collector be reassigned within 90 days, the whether a telephone number has been Bureau believes that basing the text permanently disconnected since a may obtain a safe harbor from civil message recency requirement on the 90- particular date—such as the date the liability for an unintentional third-party day maximum aging period would not consumer last consented to disclosure when sending a text message adequately address the risk of third- communicate by text message or the to a telephone number if the consumer party disclosure posed by reassignment. date of the consumer’s most recent text used the telephone number to The Bureau therefore is finalizing a 60- message—and therefore no longer communicate with the debt collector day recency requirement as part of the belongs to the consumer.332 If the about the debt by text message, the consumer-use procedures for text database shows that a particular consumer has not since opted out of text messages. The Bureau finds that a 60- telephone number has been message communications to that day period will protect consumers disconnected, then a debt collector has telephone number, and within the past against the risk of reassignment, reason to anticipate that sending a text 60 days either: (1) The consumer sent a facilitate the responsible use of text message to that number will result in a text message to the debt collector from message communications in debt third-party disclosure. Thus, once that telephone number; or (2) the debt collection, and provide stakeholders operational, the FCC’s Reassigned collector confirmed, using a complete with clarity. Numbers Database can help debt and accurate database, that the collectors comply with FDCPA section telephone number has not been An alternative way to address the risk 805(b) and the final rule’s prohibition of third-party disclosure posed by the reassigned from the consumer to on third-party disclosures. another user since the date of the reassignment of telephone numbers is to Accordingly, the final rule permits consumer’s most recent text message to require debt collectors to confirm that a debt collectors sending text messages to telephone number belongs to a use a complete and accurate database to the debt collector from that telephone consumer before sending a text message verify that a particular telephone number. As noted, the Bureau also is to that number, such as by consulting a number continues to belong to the adopting new comment 6(d)(5)–1 to reliable third-party database. Indeed, consumer. Debt collectors may rely clarify the meaning of complete and several industry commenters urged the either on this method or on the receipt accurate database, and new comment Bureau to incorporate the use of a third- of a recent text message from the 6(d)(5)(i)–1 to clarify that party database into the procedures. For consumer. Comment 6(d)(5)–1 clarifies § 1006.6(d)(5)(i) does not apply if the example, several industry commenters consumer used the telephone number to argued that debt collectors should 327 A consumer advocate commenter also communicate with the debt collector proposed requiring debt collectors to verify about the debt only by telephone call. receive a safe harbor from civil liability consumers’ contact information before for an unintentional third-party communicating electronically, but the commenter disclosure when using any telephone did not define the term verify, and it is possible the 333 The Bureau recognizes that the FCC’s number for text messages as long as the commenter was simply advocating for an opt-in Reassigned Numbers Database is not yet system. operational. Once it is operational, debt collectors telephone number has recently been 328 Reassigned Numbers Database (RND) may incorporate its use into their procedures under verified or validated as accurate. One Technical Requirements Document, 35 FCC Rcd. § 1006.6(d)(5)(i). industry commenter would have 38, ¶ 1.3 (Jan. 13, 2020) (observing that 334 As noted, the FCC has observed that currently ‘‘[c]ommercial databases exist to aid callers, but available commercial databases are not defined validated to mean that a debt these databases are not comprehensive’’); 33 FCC collector had confirmed the accuracy of comprehensive. 33 FCC Rcd. at 12027. If a Rcd. at 12027 (observing that commercial databases commercially available database that is ‘‘are not comprehensive’’). substantially similar in terms of completeness and 329 326 See In re Advanced Methods to Target & 33 FCC Rcd. at 12025. accuracy to the FCC’s Reassigned Numbers Eliminate Unlawful Robocalls, 33 FCC Rcd. 12024, 330 Id. Database does exist or come into existence, debt 12030–31 (Dec. 12, 2018) (citing 47 CFR 331 Id. collectors may incorporate its use into their 52.15(f)(1)(ii), 52.103(d)). 332 Id. at 12029. procedures under § 1006.6(d)(5)(i).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76792 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

6(d)(5)(ii) Reassigned Numbers Database. The such communications.338 Thus, Several industry commenters Bureau also is adopting new proposed § 1006.6(e) would have requested that the Bureau expand the commentary to clarify the meaning of required debt collectors to describe, procedures in proposed prior consent provided directly to a debt clearly and conspicuously in every § 1006.6(d)(3)(i)(A), or create new collector in the context of electronic communication, how procedures, to protect a debt collector § 1006.6(d)(5)(ii). Specifically, new consumers can opt out of receiving such who communicates with a consumer by comment 6(d)(5)(ii)–1 refers to comment communications directed at a specific text message after receiving the 6(d)(4)(i)(B)–1 for guidance concerning email address, telephone number for consumer’s permission to do so. The how a consumer may provide prior text messages, or other electronic- 339 Bureau believes that, if a consumer has consent directly to a debt collector medium address. It also would have consented to a debt collector’s use of a generally, and to comment 6(d)(4)(i)(B)– prohibited a debt collector from particular telephone number for text 2 for guidance concerning when a debt requiring, directly or indirectly, that the messages and has not withdrawn that collector may treat a consumer who consumer, to opt out, pay any fee to the consent, the debt collector generally provides a telephone number for text debt collector or provide any does not have reason to anticipate that messages as having provided prior information other than the email using the telephone number to consent directly to the debt collector. address, telephone number for text messages, or other electronic-medium communicate with the consumer by text 6(e) Opt-Out Notice for Electronic message will lead to a third-party address subject to the opt-out request. In Communications or Attempts To response to feedback, the Bureau is disclosure—as long as the debt collector Communicate has taken steps to confirm that the finalizing proposed § 1006.6(e) with telephone number has not been The use of electronic media for debt modifications for clarity as described reassigned.335 For this reason, the collection communications can further below. Among other things, final Bureau is finalizing § 1006.6(d)(5)(ii), the interests of both consumers and debt § 1006.6(e) increases protection for which provides that a debt collector collectors. As the Bureau explained in consumers and increases clarity for debt may obtain a safe harbor from civil the proposal, however, electronic collectors by specifying that the opt-out liability for an unintentional third-party communications also pose potential method debt collectors provide must be disclosure when sending a text message consumer harms.336 One potential harm reasonable and simple. to a telephone number if the debt relates to consumer harassment. Opt-Out Concept in General collector received directly from the Because the marginal cost of Most industry commenters supported consumer prior consent to use the transmitting electronic communications proposed § 1006.6(e) although, as telephone number to communicate with to consumers is low, particularly when explained below, many industry the consumer about the debt by text compared to mail communications, debt commenters also requested that the message, the consumer has not since collectors have less economic incentive Bureau clarify certain aspects of the withdrawn that consent, and within the to limit the number of such past 60 days the debt collector either: (1) communications. Repeated or proposal. Several industry commenters Obtained the prior consent or renewed continuous debt collection appeared to oppose proposed consent from the consumer; or (2) communications can have the natural § 1006.6(e) on the ground that it would confirmed, using a complete and consequence of harassing, oppressing, make electronic communications more accurate database, that the telephone or abusing the recipient.337 difficult, and one suggested that, instead number has not been reassigned from Another potential consumer harm of requiring debt collectors to provide the consumer to another user since the relates to communication costs. As opt-out instructions in each electronic date of the consumer’s most recent explained in the section-by-section 338 As the Bureau noted in the proposal, an opt- consent to use that telephone number to analysis of § 1006.6(d)(3), consumers out requirement is consistent with several communicate about the debt by text without unlimited text messaging plans established public policies protecting consumers message. The additional steps to may incur a charge each time they who receive electronic communications. For confirm that the telephone number has receive a text message, or each time they example, with respect to emails, the Controlling the not been reassigned are similar to those Assault of Non-Solicited Pornography and receive a text message that exceeds a Marketing (CAN–SPAM) Act of 2003, 15 U.S.C. in § 1006.6(d)(5)(i), and, like those steps, specified limit. Some consumers 7701 et seq., reflects a public policy in favor of are designed to increase the likelihood without unlimited data plans also may providing consumers with a specific mechanism to that the telephone number continues to incur a charge when they receive opt out of certain email messages. See 15 U.S.C. belong to the consumer when the debt 7704(a)(3) (requiring that commercial emails emails. include a functioning return email address or other collector communicates by text message. A way to help consumers address internet-based mechanism, clearly and As noted in the section-by-section potentially harassing or costly electronic conspicuously displayed, for the recipient to analysis of § 1006.6(d)(5)(i), new communications is to provide them request not to receive future email messages from comment 6(d)(5)–1 clarifies that the the sender at the address where the message was with a convenient way to opt out of received); Fed. Trade Comm’n, CAN–SPAM Act: A FCC’s Reassigned Numbers Database Compliance Guide for Business (Sept. 2009), qualifies as a complete and accurate 336 In this section-by-section analysis, the Bureau https://www.ftc.gov/tips-advice/business-center/ database for purposes of uses the phrase ‘‘electronic communication’’ to guidance/can-spam-act-compliance-guide-business § 1006.6(d)(5)(ii), as does any refer to emails, text messages, and other similar (explaining that messages covered by the CAN– commercially available database that is electronic communications that are readable. SPAM Act ‘‘must include a clear and conspicuous 337 As explained in the section-by-section explanation of how the recipient can opt out of substantially similar in terms of analysis of § 1006.14(a), the general prohibition in getting email from [the sender] in the future’’). In completeness and accuracy to the FCC’s § 1006.14(a) prohibits conduct the natural addition, the FTC’s regulations implementing the consequence of which is to harass, oppress, or CAN–SPAM Act prohibit charging a fee or imposing 335 The section-by-section analysis of abuse any person in connection with the collection other requirements on recipients who wish to opt § 1006.6(d)(4)(i) explains the basis for the Bureau’s of a debt. In the final rule, the Bureau is adopting out of certain email communications. 16 CFR 316.5. belief that a debt collector generally does not have two comments to clarify that the general prohibition 339 See 84 FR 23274, 23304–06 (May 21, 2019). reason to anticipate a third-party disclosure when on harassing conduct applies to debt collectors’ use Proposed comment 6(e)–1 would have clarified the communicating by email with the consumer’s of communication media other than telephone calls, meaning of clear and conspicuous and provided permission. The same explanation applies to text including cumulative communications involving examples of how to comply with proposed messages. telephone calls and other media. § 1006.6(e).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76793

communication, the Bureau should commenters also argued that enabling electronic communications is to provide allow debt collectors to inform consumers to opt out of electronic consumers with a convenient way to opt consumers periodically of the right to communications is especially important out of such communications. In opt out, or in a standard notice on the for certain groups of consumers, such as response to concerns that the ability to debt collector’s website. The Bureau those who are contacted using an opt out, on its own, does not sufficiently determines that periodically notifying employer-provided email address or protect consumers from the risks of consumers of the right to opt out, or telephone number and wish to end electronic communications, the Bureau requiring consumers to find and review those contacts immediately, those who notes that § 1006.6(e) is one of several a notice on a debt collector’s website, lack reliable access to a particular provisions in the final rule designed to does not adequately protect consumers medium of electronic communication address those risks. For example, from potentially harassing and costly and therefore prefer to opt out of § 1006.6(d)(3) through (5) describes electronic communications. A consumer communications using that medium, procedures to limit third-party who finds electronic communications and those who are contacted disclosures when sending an email or harassing or costly should not endure erroneously and prefer to opt out rather text message; § 1006.14(a) prohibits a additional harassment or cost while than to call the debt collector. debt collector from communicating waiting for a debt collector to explain However, many consumer and electronically in a manner that has the how to opt out, and a consumer should consumer advocate commenters, and natural consequence of harassing, not bear the burden and risk of locating, several government and academic oppressing, or abusing any person in reviewing, and using an opt-out notice commenters, also expressed concern connection with the collection of a debt; that appears only on a debt collector’s that proposed § 1006.6(e), on its own, § 1006.14(h) prohibits a debt collector website. Nor does the Bureau believe would not sufficiently protect from using a medium of communication that allowing consumers to opt out of consumers from the risks of electronic if a person has requested that the debt electronic communications makes such debt collection communications. For collector not use that medium; and communications more difficult. example, some commenters noted that, §§ 1006.18(d) and 1006.22(f)(4) include Presumably, many consumers who opt if a consumer was worried about protections regarding debt collectors’ out of electronic communications with phishers and scammers, the consumer use of social media. a debt collector would not respond to might be reluctant to exercise an opt-out Ease of Use of Opt-Out Instructions such communications even if opting out right, particularly one that required were difficult or impossible.340 clicking on a link or replying to an Many consumer and consumer Although, as discussed in the section- email or text message from an unknown advocate commenters, several academic by-section analysis of § 1006.6(d)(4), sender. Other commenters expressed commenters, a group of State Attorneys many consumer advocate commenters concern that a debt collector might not General, and other State and local and multiple government and academic honor a consumer’s opt-out request, government commenters noted that commenters urged the Bureau to adopt pointing to the difficulty reported by proposed § 1006.6(e) would have an opt-in system for electronic some consumers when trying to opt out required a debt collector to describe communications, they also supported of electronic communications outside of how to opt out, but it would not have allowing consumers to opt out of the debt collection context and to the required the opt-out mechanism to take electronic communications once such Bureau’s consumer survey, which a particular form. For example, these communications have begun. These showed that 75 percent of surveyed commenters expressed concern that, as commenters argued that the ability to consumers who asked a creditor or debt drafted, proposed § 1006.6(e) would opt out of electronic communications is collector to stop contacting them (orally have permitted a debt collector to critical to prevent harassment, or in writing) reported that the creditor construct a complicated opt-out particularly because the Bureau did not or debt collector attempted to contact mechanism, such as requiring a include emails and texts messages in them anyway.342 An academic consumer to opt out by mail only, or by proposed § 1006.14(b)’s frequency commenter and a local government telephone call during particular hours. limits.341 Consumer advocate commenter also asserted that opt-out Several consumer advocate commenters procedures generally create barriers to observed that, even if a debt collector 340 To the extent commenters asked the Bureau to consumer action and that certain does not intend to make it difficult to clarify whether a creditor’s electronic vulnerable populations, such as older opt out, an unnecessarily limited opt- communications must include opt-out instructions, out method may be problematic for the Bureau confirms that § 1006.6(e) applies only to consumers, might have difficulty FDCPA debt collectors. navigating even relatively simply opt- some consumers. For example, if a debt 341 One local government commenter argued that out procedures. collector inadvertently emailed a an opt-out approach for text messages effectively The Bureau determines that a way to consumer at work, an opt-out method would permit an unfair debt collection practice. address potentially harassing or costly that required a return email from that Specifically, the commenter argued that only an opt-in approach is consistent with FDCPA section email address could be problematic for 808(5), which prohibits a debt collector from purpose of the text message. The Bureau believes a consumer whose employer-provided causing charges to be made to any person for that a debt collector who communicates by text account is monitored and who would communications by concealment of the true message pursuant to the procedures in therefore prefer to contact the debt purpose of the communication and provides, as an § 1006.6(d)(5) would be unlikely to engage in such example, a consumer incurring collect telephone concealment. As explained further in the relevant collector by telephone or through call charges because the debt collector concealed section-by-section analysis, § 1006.6(d)(5) provides another communication medium. the true purpose of the call. While, as the a safe harbor from civil liability to a debt collector Similarly, if a debt collector required commenter noted, the Bureau referred to FDCPA who sends a text message to a telephone number opt-out requests to be communicated by section 808(5) in the section-by-section analysis of only if, among other things, the consumer used the proposed § 1006.6(e), the Bureau does not believe telephone number to send a text message to the debt telephone during particular hours, those and did not mean to suggest that a debt collector collector or the consumer consented directly to the hours might not be convenient for a necessarily violates FDCPA section 808(5) by debt collector’s use of text messages. In both cases, consumer. A group of State Attorneys sending a text message to a consumer with a limited the consumer has evidenced a familiarity with the General and a group of consumer text messaging plan. Rather, the Bureau believes debt collector and a willingness to communicate by that, as with any communication, a violation of text message. advocate commenters argued that, in FDCPA section 808(5) would require the debt 342 See CFPB Debt Collection Consumer Survey, this respect, proposed § 1006.6(e) was collector to engage in concealment of the true supra note 16, at 35. less protective of consumers than other

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76794 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

consumer protection laws and text reading tools and to consumers who out would force consumers with limited regulations. For example, the CAN– use email programs that do not text messaging plans to incur a charge, SPAM Act requires email marketers to download graphics. Other commenters with the fee paid to the consumer’s provide a reply email or internet-based suggested that the Bureau require debt telephone provider. An industry means by which an opt-out request may collectors to disclose that the right to commenter recommended that debt be sent by the consumer,343 and the FCC opt out can be exercised at any time, collectors include, in all text messages allows consumers to revoke consent and to ensure that the disclosure to consumers, a statement that message under the TCPA in any manner that appears in the body of a communication rates may apply. clearly expresses a desire not to receive where it can be seen without scrolling Final § 1006.6(e) retains the further messages.344 down. prohibition on fees as proposed. The Consumer, consumer advocate, The Bureau agrees that the ability to consumer advocate commenters’ government, and academic commenters opt out of electronic communications concern about the cost of an opt-out who urged the Bureau to strengthen affords little protection if the costs to notice sent by certified mail (and other proposed § 1006.6(e) offered several consumers of opting out prevent or similarly inconvenient media) is suggestions. Many such commenters unduly hinder them from making that addressed by § 1006.6(e)’s reasonable- urged the Bureau to require a debt choice. Accordingly, final § 1006.6(e) and-simple requirement; an opt-out collector to accept an opt-out request in clarifies that a debt collector must method that requires a consumer to use the same medium in which the debt describe a reasonable and simple certified mail (which entails the collector communicated with the method by which the consumer can opt consumer arranging for a special form of consumer and the opt-out instructions out of further electronic delivery that is costlier than ordinary were delivered. Thus, for example, a communications or attempts to mail and generally unwarranted under consumer should be permitted to opt communicate by the debt collector to a the circumstances) is not reasonable and out of email communications by particular electronic address or simple. Section 1006.6(e) does not, replying to a debt collector’s email. telephone number.345 The Bureau also however, prohibit a consumer from Other commenters urged the Bureau to is adopting commentary providing incurring a fee for sending an opt-out require a debt collector to accept an opt- examples, informed by suggestions from request by text message as long as such out request in any medium that the debt commenters, of opt-out methods that fee is not paid, directly or indirectly, to collector uses to communicate with comply with the reasonable-and-simple the debt collector. Because such a consumers. Thus, for example, a debt standard. Specifically, comment 6(e)–1 consumer has already expressed a collector who communicates with clarifies that, in the context of text willingness to incur the costs of text consumers by telephone, email, and message communications, the standard message communications, the Bureau mail would have to accept an opt-out is satisfied if a consumer can opt out by does not believe it is necessary to request submitted by any of those replying ‘‘stop’’ to the debt collector. prohibit consumers from incurring such methods, even if the request is in Comment 6(e)–1 also clarifies that, in costs in § 1006.6(e). And, as discussed response to an email. Other commenters the context of email communications, in detail in the section-by-section argued that the final rule should adopt the standard is satisfied if a consumer analyses of §§ 1006.6(b)(1) and a more general standard, such by as can opt out by clicking on a link in the 1006.14(h), a consumer may control requiring debt collectors to allow email or replying with the word ‘‘stop’’ communications in other ways, including by, for example, informing a consumers to opt out using any in the subject line. The Bureau expects ‘‘convenient method’’ or any debt collector by telephone that the that most debt collectors will follow ‘‘reasonable method.’’ consumer does not want to receive text these examples when they communicate Relatedly, several consumer advocate messages. The Bureau also does not electronically with consumers. commenters urged the Bureau to believe it is necessary to require debt strengthen proposed § 1006.6(e) by Permissible Fees and Required collectors to note, in text messages to elaborating generally on the procedural Information in Connection With Opt- consumers, that message rates may and disclosure requirements that debt Out Requests apply. The Bureau understands from collectors must follow. For example, a Proposed § 1006.6(e) would have consumer advocate commenters that consumer advocate commenter urged prohibited a debt collector from consumers with limited text messaging the Bureau to require debt collectors to plans generally are aware that they may requiring, directly or indirectly, that the provide consumers with a hyperlink be charged for text messages. consumer, in order to opt out, pay any allowing them to opt out of electronic Proposed § 1006.6(e) also would have fee to the debt collector. A group of communications. A group of consumer prohibited a debt collector from advocate commenters urged the Bureau consumer advocate commenters noted requiring that the consumer, in order to to require debt collectors to list all the that, because this prohibition was opt out, provide any information other ways a consumer may opt out of limited to paying a fee to a debt than the email address, telephone electronic communications, and to do so collector, a debt collector could still number for text messages, or other in textual rather than graphic format to require the consumer to pay a fee to a electronic-medium address subject to ensure that the information is available third party. For example, the the opt-out request. Federal government to visually impaired consumers who use commenters noted, proposed § 1006.6(e) agency staff encouraged the Bureau to would appear to have allowed debt ensure that this prohibition would not 343 See 15 U.S.C. 7704(a)(3)(A) (making it collectors to require a certified letter to inadvertently prevent consumers from ‘‘unlawful for any person to initiate the opt out, with the fee paid to the postal also sharing their opt-out preferences. transmission to a protected computer of a service. In addition, these commenters The Bureau intended to allow debt commercial electronic mail message that does not observed, a debt collector who requires contain a functioning return electronic mail address collectors to solicit a consumer’s opt-out or other internet-based mechanism’’). consumers to send a text message to opt preferences, and the final rule expressly 344 See In re Rules & Regulations Implementing adds the consumer’s opt-out preferences 345 the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. As explained in the section-by-section to the list of information that a debt 7961, 7996 (July 10, 2015), set aside in part by ACA analysis of § 1006.6(d)(4)(ii), the reasonable-and- Int’l v. Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. simple standard also appears in the Bureau’s collector may require the consumer to Cir. 2018). Regulation V. 12 CFR 1022.25. provide.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76795

Processing Period for Opt-Out Requests have a bona fide error defense to civil communicate with the consumer. Some liability under FDCPA section 813(c).346 industry commenters asked whether a Multiple industry commenters and Other Requests for Clarification § 1006.6(e) opt-out request should be one consumer advocate commenter treated as a request to cease all requested that the Bureau specify the The requirements of final § 1006.6(e), communication regardless of medium, time period within which a debt like the requirements of proposed while other industry commenters asked collector would be required to process § 1006.6(e), apply to all electronic whether a consumer’s request that a a consumer’s request to opt out. One communications using a specific email debt collector cease sending text industry commenter suggested that the address, telephone number for text messages to a particular telephone Bureau require debt collectors to messages, or other electronic-medium number should also be treated as address. A group of consumer advocate process opt-out requests within a request to cease telephone calls to that commenters expressed concern that ‘‘reasonable’’ period of time, while number. A consumer advocate direct messages sent using certain social another industry commenter suggested a commenter and a local government media platforms—such as platforms that 72-hour processing period. Several commenter asked whether a § 1006.6(e) allow users to search by name rather industry commenters suggested a 10-day opt-out request made to one debt than by email address, telephone processing period, which is the period number, or another account identifier— collector binds future debt collectors the FTC has set for processing opt-out might not be covered by proposed collecting the same debt. requests under the CAN–SPAM Act. An § 1006.6(e) because those platforms may Consistent with proposed § 1006.6(e), industry commenter who presently not use electronic-medium addresses. final § 1006.6(e) requires a debt collector communicates with consumers by email These commenters urged the Bureau to to describe how to opt out of further stated that it processes opt-out requests clarify that opt-out notices are required electronic communications or attempts in less than 10 minutes, another for all electronic communications. The to communicate by the debt collector to industry commenter predicted that debt language of § 1006.6(e) makes clear that a particular address or telephone collectors would be able to process opt- it applies to all electronic number. In general, the Bureau out requests in 24 to 48 hours, and communications, regardless of whether determines that a consumer who another industry commenter predicted that particular form of electronic requests that a debt collector cease using that debt collectors would be able to communication is specified in the rule. a particular address or telephone process opt-out requests in fewer than This includes direct messaging number to communicate electronically 10 days. A consumer advocate communications on social media and about one of the consumer’s debts likely commenter proposed a processing communications in an application on a wishes the debt collector to cease using period of 24 hours, arguing that the website, mobile telephone, or computer. that particular address or telephone frequency of some debt collection It also includes electronic number to communicate about any other communications means that a short communications using platforms that debt being collected by the debt compliance period is necessary to allow users to search by name or collector. Comment 14(h)(1)–3.ii ensure that a consumer’s opt-out request another identifier rather than by email addresses this issue further. is honored. address or telephone number. Several industry commenters asked Moreover, absent evidence to the The Bureau recognizes that any the Bureau to clarify the scope of an opt- contrary, a consumer’s request to opt maximum processing period for opt-out out request made under § 1006.6(e). For out of electronic communications to a requests under § 1006.6(e) must be short example, some industry commenters particular address or telephone number enough to protect consumers from asked whether a § 1006.6(e) opt-out is not a request to opt out of electronic unwanted electronic communications request applies to all of a consumer’s communications to a different address but long enough for compliance to be debts being collected by a particular or telephone number, a request to opt practical. Given the disparate periods of debt collector or only to the specific out of all electronic communications, or time suggested by commenters, and the debt about which the debt collector a request to opt out of communications fact that few debt collectors communicated. Other industry altogether. A consumer who objects to communicate electronically and process commenters asked whether a § 1006.6(e) receiving electronic communications electronic opt-out requests today, the opt-out request applies to all electronic sent to a particular address or telephone final rule does not specify the period of communication media or only to the number (because, for example, that time afforded a debt collector to process medium of electronic communication address or number has been provided by an opt-out request under § 1006.6(e). (or the particular address or telephone the consumer’s employer or is subject to However, depending on the number) used by the debt collector to usage fees) may not object to a debt circumstances, a debt collector who collector’s use of a different address or unintentionally communicates with a 346 Cf. Transworld Sys., Inc., 953 F.2d at 1036 number or to a debt collector’s use of a consumer electronically after receiving a (holding debt collector’s letter, mailed shortly after different medium of communication. receiving consumer’s cease communication consumer’s request to opt out but before notification, constituted bona fide error where debt Similarly, absent evidence to the processing the request may have a bona collector’s procedures were reasonably adapted to contrary, a consumer’s request to opt fide error defense to civil liability under avoid such an error); ACB Receivables Mgmt., Inc., out of text messages to a particular FDCPA section 813(c). For example, if a 15 F. Supp. 3d at 629 (denying bona fide error defense where debt collector communicated with telephone number is not a request to opt debt collector who schedules an email consumer after receiving consumer’s cease out of telephone calls to that number. A to be sent to a consumer later receives communication notification but failed to present consumer who objects to receiving text an opt-out request from the consumer any evidence of redundancy or safeguards in its messages from a debt collector (because, procedures to prevent such errors); Carrigan, 494 F. but sends the previously scheduled Supp. at 827 (denying bona fide error defense for example, the consumer is charged email to the consumer before the request where debt collector communicated with consumer for each such message) may not object can be processed (notwithstanding the after receiving consumer’s cease communication to receiving telephone calls. Nor does a maintenance of procedures to avoid notification but failed to provide evidence that it consumer’s request to opt out under maintained proper procedures governing mail such an error), the debt collector may handling). § 1006.6(e) bind a subsequent debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76796 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

collector.347 A consumer who objects to receives a request to ‘‘stop,’’ debt being collected. Further, although one debt collector’s use of electronic ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ or § 1006.14(h)(2)(i) permits a debt communications might not object to ‘‘cancel’’ will be considered to have collector to send an electronic another debt collector’s use of such received an opt-out request even though confirmation of a consumer’s request to communications if, for example, the the specific term the consumer used opt out provided that the confirmation timing and frequency of the does not conform precisely to the opt- contains no information other than a communications differ or the out instructions provided by the debt statement confirming the person’s consumer’s personal circumstances collector pursuant to § 1006.6(e). request and that the debt collector will have changed. Proposed § 1006.6(e) would have honor it, the Bureau does not believe it In the proposal, the Bureau requested required a debt collector to describe is necessary or warranted to provide comment on whether to identify in the how to opt out clearly and model language given the brevity of the final rule a non-exclusive list of words conspicuously, and proposed comment communication. or phrases—such as ‘‘stop,’’ 6(e)–1 would have clarified, among A group of consumer advocate ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ or other things, that an email would commenters observed that, although ‘‘cancel’’—that express an opt-out comply with the clear and conspicuous proposed § 1006.6(e) would have instruction. Several industry requirement by including instructions required a debt collector to describe commenters requested that the final rule in a textual format, in a type size no how to opt out of electronic include such a list. Two industry smaller than the other text in the email. communications directed to a particular commenters argued that the final rule Several industry and consumer advocate address or telephone number, it would should allow debt collectors to identify commenters requested that the Bureau not have explicitly required the debt for consumers the exact words needed elaborate on the clear and conspicuous collector to honor such a request; to opt out and that, if a consumer uses requirement, including by specifying a instead, the requirement to honor an different words, a debt collector should minimum type size for instructions opt-out request would have appeared in have more time to process the request. contained in emails and clarifying proposed § 1006.14(h). The final rule Another industry commenter suggested whether a font comparison to the rest of retains the same structure, with the that the Bureau identify an exclusive list an email should exclude graphics, logos, requirement to disclose an opt-out of words that express an opt-out request. or other non-substantive content within method appearing in § 1006.6(e) and the An industry commenter suggested that the message. Several industry requirement to honor an opt-out request debt collectors should be required to commenters also urged the Bureau to appearing in § 1006.14(h)(1). Section treat only two words as expressing an provide model instructions that would 1006.14(h)(1) broadly prohibits debt opt-out instruction: ‘‘stop’’ and ‘‘opt satisfy the clear and conspicuous collectors from communicating or out.’’ A group of consumer advocate requirement. attempting to communicate with a commenters urged the Bureau to require Final § 1006.6(e) retains the clear and person through a medium of debt collectors to honor standard opt- conspicuous requirement. The Bureau communication if the person has out phrases, such as ‘‘stop,’’ also is adopting commentary that refers requested that the debt collector not use ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ and to comment 6(d)(4)(ii)(C)–1 for guidance that medium to communicate with the ‘‘cancel.’’ on the meaning of clear and person, and comment 14(h)(1)–3.ii The Bureau determines that words conspicuous and provides examples illustrates that such a request includes such as ‘‘stop,’’ ‘‘unsubscribe,’’ ‘‘end,’’ illustrating how to comply with the rule an opt-out request made pursuant to the ‘‘quit,’’ or ‘‘cancel’’ generally express a when sending a text message or email. § 1006.6(e) instructions. consumer’s intent to opt out. But these The Bureau declines, however, to Another consumer advocate are not the only words that express such specify precisely where in an electronic commenter recommended that the an intent. A consumer may respond to communication the instructions Bureau permit consumers to provide a debt collector’s electronic required by § 1006.6(e) must be placed debt collectors with a list of third communication with an email or text or how large the type size must be. parties who should not be contacted for message that makes the consumer’s Different debt collectors may design any reason, including for location-call desire to opt out clear without using one their electronic communications in purposes. Although nothing in the final of these words. Given the variety of different ways, and the Bureau does not rule would prohibit a consumer from ways in which a consumer may express believe it is necessary or warranted to offering such a list or a debt collector an intent to opt out, the Bureau declines specify such details, as long as the from requesting or accepting such a list, to identify an exclusive list of words disclosure satisfies the clear and the commenter’s request is outside the that express such an intention. conspicuous standard. scope of this rulemaking. Conversely, a debt collector who An industry commenter asked the A local government commenter Bureau to clarify whether a debt recommended that the Bureau require 347 The Bureau notes, however, that, as explained collector who receives an opt-out debt collectors to disclose to consumers above, § 1006.6(d)(4)(iii) provides that a debt request under § 1006.6(e) may send the additional information about how to collector may obtain a safe harbor from civil consumer a single reply to acknowledge limit debt collection communications. liability for an unintentional third-party disclosure the request and advise the consumer For example, the commenter suggested when sending an email to an email address if: (1) Any prior debt collector obtained the email address that the request applies only to the that the Bureau require debt collectors in accordance § 1006.6(d)(4)(i) or (ii); (2) the specific communication medium used to disclose that consumers can cease all immediately prior debt collector used the email by the debt collector and the specific telephone communications or cease address to communicate with the consumer about debt being collected. The same telephone communications to a the debt; and (3) the consumer did not opt out of such communications. Thus, if a consumer opts out commenter also asked the Bureau to particular number. As the Bureau noted of the immediately prior debt collector’s use of an provide model language. As noted in the proposal, § 1006.6(e) addresses a email address by following instructions provided above, and as comment 14(h)(1)–3.ii group of concerns that are unique to pursuant to § 1006.6(e), a subsequent debt collector illustrates, a consumer’s request to opt electronic communications and who uses that email address to communicate with the consumer would not be covered by out under § 1006.6(e) applies to any of attempts to communicate. With respect § 1006.6(d)(4)(iii). Such a debt collector may, the consumer’s debts being collected by to telephone calls in particular, however, be covered by § 1006.6(d)(4)(i) or (ii). the debt collector—not just the specific consumers likely know how to ask debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76797

collectors to stop placing unwanted which refers to comment 6(d)(4)(ii)(C)– in a manner that permits consumers to telephone calls; § 1006.14(h)(1) would 1 for guidance on the meaning of clear understand the costs, benefits, and risks require debt collectors to honor such and conspicuous and to comment associated with the product or service, requests; and the rebuttable 6(d)(4)(ii)(C)(4)–1 for guidance on the in light of the facts and circumstances. presumptions established by meaning of reasonable and simple, and A consumer’s ability to opt out of § 1006.14(b)(2) would address the provides examples illustrating the rule. electronic communications from a debt frequency of such calls. For these The Bureau is finalizing § 1006.6(e) as collector is a feature of debt collection, reasons, the Bureau declines the an interpretation of FDCPA sections 806 and the opt-out instructions required by commenter’s suggestion to require debt and 808, pursuant to its authority under proposed § 1006.6(e) disclose that collectors to provide more detailed FDCPA section 814(d) to prescribe rules feature to consumers. information about how consumers may with respect to the collection of debts by Section 1006.10 Acquisition of limit telephone communications. debt collectors. FDCPA section 806 An industry commenter asked the prohibits conduct the natural Location Information Bureau to create an exception to consequence of which is to harass, FDCPA section 804 imposes certain § 1006.6(e) for electronic oppress, or abuse any person in requirements and limitations on a debt communications sent to an email connection with the collection of a debt. collector who communicates with any address provided by the consumer to a Because the marginal cost of person other than the consumer for the court pursuant to a State’s e-filing rules, transmitting electronic communications purpose of acquiring location arguing that there may be a potential to consumers is low, particularly when information about the consumer.349 conflict with some State court e-filing compared to mail communications, debt FDCPA section 803(7) defines the term rules. The Bureau declines the collectors have less economic incentive location information.350 The Bureau commenter’s request. As discussed to limit the number of such proposed § 1006.10 to implement above, § 1006.6(e) requires a debt communications. As multiple consumer FDCPA sections 803(7) and 804.351 collector to disclose an opt-out method, advocate commenters confirmed, a Proposed § 1006.10 generally mirrored whereas § 1006.14(h)(1) requires a debt reasonable and simple mechanism to the statute, with minor wording and collector to honor an opt-out request. opt out allows some consumers to organizational changes for clarity. In The Bureau believes that the situation protect themselves from emails and text addition, proposed § 1006.10(c) would raised by the commenter is addressed by messages they believe are harassing, have clarified that proposed final § 1006.14(h)(2)(iii), which provides oppressive, or abusive. Section § 1006.14(b)’s limits on telephone calls that, notwithstanding the prohibition in 1006.6(e) provides consumers with such also apply to location calls, and § 1006.14(h)(1), a debt collector may, if a mechanism. proposed comments 10(a)–1 and required by applicable law, FDCPA section 808 prohibits the use 10(b)(2)–1 would have clarified how communicate or attempt to of unfair or unconscionable means to § 1006.10 applies in the decedent debt communicate with a person in collect or attempt to collect any debt. It context. connection with the collection of any is unfair or unconscionable under the The Bureau received two overarching debt using a medium that the person has FDCPA for a debt collector to send a comments regarding proposed requested the debt collector not use.348 consumer an electronic communication, § 1006.10. First, several consumer For all of the reasons discussed above, such as an email or text message, advocates recommended prohibiting the Bureau is finalizing § 1006.6(e), without providing a reasonable and any communications with third parties, which provides that a debt collector simple method to opt out. Because the including for location purposes. These who communicates or attempts to marginal cost of transmitting electronic commenters argued that such communicate with a consumer communications to consumers is low, communications risk violating the electronically in connection with the particularly when compared to mail privacy of consumers, subjecting the collection of a debt using a specific communications, debt collectors have third parties to harassment, and giving email address, telephone number for less economic incentive to limit the domestic abusers the opportunity to text messages, or other electronic- number of such communications. learn details of a consumer’s financial medium address must include in such Moreover, as multiple consumer situation or to manipulate the debt communication or attempt to advocate commenters confirmed, for a collector into revealing other private communicate a clear and conspicuous consumer who does not maintain an information about the consumer. The statement describing a reasonable and unlimited data plan, emails and text Bureau declines to adopt such a simple method by which the consumer messages can lead to charges the prohibition because FDCPA section 804 can opt out of further electronic consumer does not want to incur. In the expressly allows debt collectors to communications or attempts to absence of a reasonable and simple opt- contact third parties to seek location communicate by the debt collector to out method, a consumer who wants to information and, as discussed below, that address or telephone number. Final unsubscribe from electronic includes restrictions on the form, § 1006.6(e) also provides that the debt communications may incur time and content, and frequency of location collector may not require, directly or cost doing so. On balance, in the communications that are specifically indirectly, that the consumer, in order Bureau’s view, these costs to consumers designed to protect consumers’ privacy to opt out, pay any fee to the debt do not outweigh the benefits to debt and third parties from harassment. collector or provide any information collectors of omitting opt-out FDCPA section 805(c) provides that, other than the consumer’s opt-out instructions from electronic subject to certain exceptions, if a preferences and the email address, communications. consumer notifies a debt collector in telephone number for text messages, or The Bureau also is finalizing writing that the consumer refuses to pay other electronic-medium address subject § 1006.6(e) pursuant to its authority a debt or that the consumer wishes the to the opt-out request. In addition, the under section 1032(a) of the Dodd-Frank debt collector to cease further Bureau is adopting comment 6(e)–1, Act to prescribe rules to ensure that the features of any consumer financial 349 15 U.S.C. 1692b. 348 For additional discussion, see the section-by- product or service are fully, accurately, 350 15 U.S.C. 1692a(7). section analysis of § 1006.14(h)(2)(iii). and effectively disclosed to consumers 351 See 84 FR 23274, 23307 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76798 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

communication with the consumer, the telephone number at such place, ‘‘or’’ collectors state, among other things, debt collector shall cease further the consumer’s place of employment. ‘‘that [they are] confirming or correcting communication with the consumer with An industry commenter asked whether location information’’ for the consumer. respect to such debt.352 A group of State debt collectors could continue seeking The commenters believed that such Attorneys General recommended giving one element of location information if language reveals that the consumer third parties (i.e., parties who are not they already had the other, while a owes a debt. A group of State Attorneys consumers under either FDCPA section consumer advocate asked the Bureau to General asked the Bureau to adopt a 803(3) or 805(d)) the right to cease clarify that possessing one element broad interpretation of FDCPA section communications from debt collectors. prohibits a debt collector from further 804(5) (proposed to be implemented as The Bureau declines to include such a location communications. Finally, § 1006.10(b)(4)). FDCPA section 804(5) provision—which does not appear in consumer advocates recommended that restricts debt collectors from using any the FDCPA and which the Bureau did the Bureau prohibit a debt collector language or symbol in mailed location not propose—in this final rule. from calling third parties under the communications that indicates the debt However, several other provisions in the pretense of gaining information that the collector is in the debt collection statute or the final rule (or both) apply debt collector already possesses. business. The commenter requested that to location communications and may The Bureau declines to finalize the the Bureau interpret this restriction as provide third parties similar protection. types of clarifications the commenters applying to location communications For example, under the final rule, a requested. The Bureau believes the sent by media in addition to mail. third party’s request to never be definition of ‘‘location information’’ The Bureau has considered these contacted again is a factor that may currently does not present a serious comments but declines to interpret the rebut a debt collector’s presumption of source of harm to consumers or burden statutory requirement related to these compliance with § 1006.14(b)(1) and to debt collectors. For example, the provisions. The Bureau did not propose FDCPA section 806(5) when telephone Bureau is unaware of significant recent changes to these statutory provisions call volume is at or below the levels litigation or enforcement actions and concludes that additional specified in § 1006.14(b)(2)(i).353 concerning the definition of location information, including through public Moreover, as discussed below, FDCPA information. While the Bureau comment, would be advisable before section 804(3) and final § 1006.10(c) understands that there may be some adopting any such interpretations. prohibit debt collectors from uncertainty regarding mobile telephone One industry commenter asked for communicating more than once with a numbers and email addresses, the clarity on proposed § 1006.10(b)(5), third party to seek location information Bureau notes that nothing in the final which would have implemented FDCPA unless requested to do so by such rule prohibits a debt collector who is section 804(6), and provided, in relevant person, or unless the debt collector engaged in a permissible location part that, if a debt collector knows that reasonably believes that the earlier communication from requesting other a consumer is represented by an response of such person is erroneous or pieces of contact information for the attorney, the debt collector must not incomplete and that such person now consumer. Finally, the Bureau does not communicate with any person other has correct or complete location believe that it is necessary or warranted than the attorney, unless the attorney information. For these reasons, and for to provide additional interpretation fails to respond ‘‘within a reasonable the reasons discussed below, the Bureau regarding the pretext for location period of time.’’ The commenter asked is finalizing proposed § 1006.10 largely communications. The Bureau notes that the Bureau to clarify the meaning of a as proposed, with minor changes for § 1006.10(b) specifies that ‘‘reasonable period of time.’’ The Bureau clarity. The Bureau is finalizing communications under this section believes that reasonableness generally proposed § 1006.10 pursuant to its must be ‘‘for the purpose of acquiring depends upon the facts and authority under FDCPA section 814(d) location information.’’ The Bureau will circumstances surrounding a debt to prescribe rules with respect to the monitor this definitional issue for any collector’s communications with a collection of debts by debt collectors potential consumer harm or compliance consumer’s attorney. Accordingly, the and to interpret FDCPA section 804. concerns and revisit at a later time if Bureau declines to identify a blanket needed. period of time after which all 10(a) Definition communications with persons other Consistent with the statute, the 10(b) Form and Content of Location than a consumer’s attorney are Bureau proposed § 1006.10(a) to provide Communications permissible in all cases. that location information means a The Bureau proposed § 1006.10(b) to Finally, in its Policy Statement on consumer’s place of abode and implement the paragraphs of FDCPA Decedent Debt, the FTC stated that it telephone number at such place or the section 804 that address the form and would refrain from taking enforcement consumer’s place of employment. The content of location communications.354 action under FDCPA section 804(2) Bureau received several comments on Proposed § 1006.10(b) generally against debt collectors who state that this proposed definition. Several mirrored the statute, and the Bureau they are seeking to locate a person ‘‘with industry commenters asked the Bureau received only a few comments the authority to pay any outstanding to clarify that location information addressing it. For the reasons discussed bills of the decedent out of the includes a consumer’s mobile telephone below, the Bureau is finalizing decedent’s estate.’’ 355 The Bureau number and email address. Other § 1006.10(b) as proposed. requested comment on the language commenters noted that proposed Two industry commenters expressed debt collectors may use to locate a § 1006.10(a) mirrored the FDCPA dissatisfaction with FDCPA section person handling the decedent’s affairs section 803(7)’s disjunctive definition of 804(1), proposed to be implemented as in the FTC’s Policy Statement (‘‘with the location information, i.e., the § 1006.10(b)(1), which requires that, authority to pay any outstanding bills of consumer’s place of abode and during location communications, debt the decedent out of the decedent’s estate’’) compared to proposed comment 352 15 U.S.C. 1692c(c). 354 See FDCPA section 804(1)–(2) and (4)–(6), 15 353 See the section-by-section analysis of U.S.C. 1692b(1)–(2) and (4)–(6) (proposed as 355 FTC Policy Statement on Decedent Debt, supra § 1006.14(b)(2). § 1006.10(b)(1) through (5)). note 157, at 44918–23.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76799

10(b)(2)–1 (‘‘authorized to act on behalf location communications from the must not communicate with a person for of the deceased consumer’s estate’’). An definition of communication in the the purpose of obtaining location industry commenter supported the decedent debt context. And consumer information more than once, unless the Bureau’s language, while a trade group advocates asked the Bureau to require debt collector reasonably believes that commenter and a group of consumer debt collectors to check whether public the person’s earlier response was advocates stated that they had no records listed an executor or erroneous or incomplete and that the concerns with the proposal. Several administrator, and if so, to prohibit person now has correct or complete commenters, however, preferred that communications with anyone other than information. Proposed § 1006.10(c) also debt collectors use other language to that individual. The Bureau declines to specified that debt collectors engaging locate the person authorized to act on interpret communications so as not to in location communications by behalf of the deceased consumer’s include any location communications in telephone must comply with the estate. Most of these commenters the decedent debt context. The Bureau telephone frequency limits in preferred the FTC’s language for several also declines to adopt a requirement to § 1006.14(b). reasons, including that some check public records. The Bureau A government commenter and several individuals might be authorized to act supports the FTC’s encouragement for consumers and consumer advocates on behalf of the estate only in limited debt collectors to make good-faith objected to the proposal to apply the ways that do not involve paying the efforts to search public records before same frequency limits to location calls deceased consumer’s debts; that the communicating with a deceased as to telephone calls generally (i.e., up privacy interests the FDCPA aimed to consumer’s estate.357 Nevertheless, the to seven unanswered telephone calls to protect were lower in the decedent debt Bureau concludes that final § 1006.10’s a person during a seven-day period).358 context; and that referring to the provisions regulating location These commenters stated that the authority to act on behalf of the estate communications, combined with final proposed frequency limits were too high was likely to prompt clarifying § 1006.6(a)’s restrictions on the for any person, but especially for third questions that might reveal that the individuals with whom debt collectors parties receiving location calls, who consumer owes a debt. One industry may communicate, provides sufficient may be more likely to find such calls commenter stated that it asked for the restrictions on communications harassing because they do not owe the person ‘‘handling the financial affairs’’ consistent with the statutory provisions, debt. Consumer advocates also of the deceased consumer and that the without the need for definitional suggested that third parties were Bureau should adopt this language. A changes or new record-checking unlikely to answer location telephone trade group commenter asked the requirements. calls and therefore would not receive Bureau to allow debt collectors to use For the reasons discussed above, the the benefit of proposed § 1006.10(c)’s the FTC’s language in response to Bureau is finalizing § 1006.10 and restriction on debt collectors follow-up questions during a location comments 10(a)–1 and 10(b)(2)–1 communicating more than once with communication, while another trade largely as proposed, with minor changes third parties for location information group commenter suggested that the for clarity. purposes. Some of these commenters rule allow both the FTC’s and the Comment 10(a)–1 provides that, if a proposed various alternative frequency Bureau’s language. consumer obligated or allegedly limits, such as one attempt per third The Bureau understands commenters’ obligated to pay any debt is deceased, party per week. policy arguments but remains location information includes the The Bureau declines to revise concerned about the phrase information described in § 1006.10(a) § 1006.10(c) to set forth unique ‘‘outstanding bills’’ from the FTC’s for a person who is authorized to act on telephone calling frequencies for third Policy Statement. FDCPA section 803(5) behalf of the deceased consumer’s parties. As discussed in the section-by- defines debt broadly to include ‘‘any estate, as described in § 1006.6(a)(4) and section analysis of § 1006.14, the Bureau obligation or alleged obligation of a its associated commentary. Comment finds that the frequency standards consumer to pay money arising out of a 10(b)(2)–1 provides that, if the described in that section are appropriate transaction . . . primarily for personal, consumer obligated or allegedly for third parties as well as consumers. family, or household purposes.’’ 356 obligated to pay the debt is deceased, Moreover, as discussed above, debt Because the definition is not limited to and the debt collector is attempting to collectors’ telephone calls to third delinquent or defaulted obligations, locate the person who is authorized to parties are cabined by the general even references to outstanding bills may act on behalf of the deceased statutory prohibition, implemented in reveal that the consumer owes a debt consumer’s estate, the debt collector § 1006.6(d), against communicating with under the FDCPA. Accordingly, the does not violate § 1006.10(b)(2) by third parties unless they have the Bureau is finalizing comment 10(b)(2)– stating that the debt collector is seeking purpose of obtaining location 1, in relevant part, as proposed. To to identify and locate the person who is information. The Bureau acknowledges increase flexibility, final comment authorized to act on behalf of the that, as suggested by some consumer 10(b)(2)–1 also permits debt collectors deceased consumer’s estate. The debt advocates, some third parties could to identify the person authorized to act collector may also state that the debt receive excess telephone calls. The on behalf of the deceased consumer’s collector is seeking to identify and Bureau is not aware, however, that debt estate as the person handling the locate the person handling the financial collectors are routinely or successfully financial affairs of the deceased affairs of the deceased consumer. claiming in litigation or enforcement consumer because the Bureau notes that this language is also unlikely to reveal 10(c) Frequency of Location 358 Specifically, proposed § 1006.14(b) provided a Communications bright-line rule that a debt collector does not violate the existence of a debt. FDCPA section 806(5)’s prohibition against Two commenters made additional Proposed § 1006.10(c) would have repeated or continuous telephone calls if the debt suggestions. A trade group commenter implemented FDCPA section 804(3), collector places seven or fewer telephone calls to requested that the Bureau exempt which provides that a debt collector a person about a debt during a seven-day period (and does not place another telephone call to the person after having had a telephone conversation 356 15 U.S.C. 1692a(5). See also the section-by- 357 FTC Policy Statement on Decedent Debt, supra with the person during the seven-day period). 84 FR section analysis of § 1006.2(h). note 157, at 44919–20. 23274, 23401 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76800 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

actions that such telephone calls are describing harassing conduct that they In light of these comments, the properly placed for the purpose of or their clients have experienced by Bureau is adopting two comments to acquiring location information and debt collectors. For example, some clarify that the general prohibition on consistent with the prohibition against commenters stated that they are afraid harassing conduct in FDCPA section communicating more than once with a to answer telephone calls because debt 806, as implemented in § 1006.14(a), third party to seek location information. collectors have called them repeatedly applies whether debt collectors place Finally, location communications are and used profane language. Other telephone calls or use other subject to § 1006.14’s general commenters described feeling shame communication media. In addition, the prohibition on harassing, oppressive, or when debt collectors disclosed comments clarify that all abusive conduct. information to neighbors and friends communication media are analyzed about debts they allegedly owed. individually as well as cumulatively.363 Section 1006.14 Harassing, Commenters described debt collectors Comment 14(a)–1 clarifies that Oppressive, or Abusive Conduct threatening them with criminal § 1006.14(a), which implements FDCPA FDCPA section 806 359 prohibits a prosecution or bodily harm if they did section 806, sets forth a general standard debt collector from engaging in any not pay an alleged debt immediately. that prohibits a debt collector from conduct the natural consequence of Some commenters explained that these engaging in any conduct the natural which is to harass, oppress, or abuse types of behaviors by debt collectors consequence of which is to harass, any person in connection with the cause them stress that manifests into oppress, or abuse any person in collection of a debt. It lists six non- physical symptoms such as increased connection with the collection of a debt. exhaustive examples of such prohibited blood pressure, heavy breathing, pain, The comment clarifies, further, that the conduct. The Bureau proposed and loss of sleep. The Bureau general prohibition covers the specific § 1006.14 to implement and interpret emphasizes that the conduct described conduct described in § 1006.14(b) FDCPA section 806.360 Except with by commenters above is prohibited by through (h), as well as any conduct by respect to § 1006.14(b) and (h), proposed FDCPA section 806 and final § 1006.14, the debt collector that is not specifically § 1006.14 generally restated the statute, even if specific examples of such prohibited by § 1006.14(b) through (h) with only minor wording and conduct are not discussed in the but that the natural consequence of organizational changes for clarity. regulation text or commentary. which is to harass, oppress, or abuse The following section-by-section any person in connection with the 14(a) In General analyses summarize and address collection of a debt. The comment comments related to proposed As noted, FDCPA section 806 explains that the conduct can occur § 1006.14(a), (b), and (h). Apart from one generally prohibits a debt collector from regardless of the communication media comment related to proposed engaging in any conduct the natural the debt collector uses, including in- § 1006.14(g) that does not require any consequence of which is to harass, person interactions, telephone calls, changes to regulation text or oppress, or abuse any person in audio recordings, paper documents, commentary,361 the Bureau did not connection with the collection of a debt, mail, email, text messages, social media, receive feedback specifically addressing and FDCPA section 806(1) through (6) or other electronic media, even if not proposed § 1006.14(c) through (g) and lists six non-exhaustive examples of specifically addressed by § 1006.14(b) therefore is finalizing these paragraphs such prohibited conduct. Proposed through (h). as proposed. The Bureau is finalizing § 1006.14(a) would have largely restated Comment 14(a)–1 also includes an § 1006.14 pursuant to its authority FDCPA section 806.362 For the reasons example involving a scenario in which, under FDCPA section 814(d) to discussed below, the Bureau is in connection with the collection of a prescribe rules with respect to the finalizing § 1006.14(a) generally as debt: A debt collector sends a consumer collection of debts by debt collectors, as proposed but is adopting new comments numerous, unsolicited text messages per well as pursuant to its authority to 14(a)–1 and –2 in response to feedback day for several consecutive days; the implement and interpret FDCPA section requesting clarity about its scope. consumer does not respond; the debt 806. The Bureau received a number of collector does not communicate or The Bureau notes that it received comments requesting clarification about attempt to communicate with the many comments from individual and the scope of FDCPA section 806 as it consumer using any other consumer advocate commenters would have been implemented in communication medium; and that, by proposed § 1006.14(a). For example, a sending the text messages, the debt 359 15 U.S.C. 1692d. group of consumer advocates asked that collector has not violated § 1006.14(b) 360 See 84 FR 23274, 23307–22 (May 21, 2019). the Bureau include in the rule text or through (h). The comment clarifies that 361 The commenter requested guidance on a debt commentary the statement the Bureau even though the debt collector has not collector’s responsibility to identify the person the made in the preamble to the proposal debt collector has reached during a telephone call violated any specific prohibition under (i.e., whether the debt collector has reached, or is that § 1006.14(a) applies to § 1006.14(b) through (h), it is likely that being contacted by, the consumer or a third party). communication media other than the natural consequence of the debt The commenter noted that this question is relevant telephone calls. The same group of collector’s text messages is to harass, to complying with the requirement under FDCPA consumer advocates asked the Bureau to section 806(6) (proposed as § 1006.14(g)) to meaningfully disclose, except with respect to clarify that § 1006.14(a) applies based 363 As provided for in comment 14(b)(1)–1, a debt location information calls, the debt collector’s on the cumulative effect of a debt collector who complies with § 1006.14(b)(1) and identity on telephone calls, as well as with respect collector’s conduct across multiple FDCPA section 806(5) complies with § 1006.14(a) to other requirements and prohibitions under the communication media. An industry and FDCPA section 806 solely with respect to the FDCPA and the regulation (as proposed). In frequency of its telephone calls. When a debt response to this comment, the Bureau confirms that commenter asked the Bureau to confirm collector both places telephone calls and uses at there are a number of contexts, including the the opposite—i.e., that § 1006.14(a) least one other type of communication media, meaningful disclosure of identity provision, in applies separately to each compliance with § 1006.14(a) depends on the which the statute (and final rule) requires a debt communication method used by the whether the cumulative communications involving collector to determine the identity of the person to telephone calls and any other communication whom the debt collector is speaking; the Bureau debt collector. media have the natural consequence of harassing, declines to provide detailed guidance as to how oppressing, or abusing any person in connection debt collectors should make such a determination. 362 See 84 FR 23274, 23307 (May 21, 2019). with the collection of a debt.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76801

oppress, or abuse the person receiving communications, and the Bureau is not from engaging in any conduct the them and that when such natural aware of these debt collectors sending natural consequence of which is to consequence occurs, the debt collector excessive electronic communications. harass, oppress, or abuse any person in has violated § 1006.14(a) and FDCPA Even if, as a result of this final rule, debt connection with the collection of a debt, section 806. collectors choose to send electronic as provided for in FDCPA section 806 Comment 14(a)–2 addresses communications more frequently than and § 1006.14(a). Because neither the cumulative communications by the debt they currently do, the Bureau does not text of § 1006.14(a) nor the text of collector, and clarifies that, depending believe that sending excessive electronic § 1006.6(e) or § 1006.14(h) states or on the facts and circumstances, conduct communications, including by implies that a consumer would have to that on its own would violate neither programming systems to send multiple opt out of receiving electronic the general prohibition in § 1006.14(a), emails per second, generally would be communications or request the debt nor any specific prohibition in a profitable strategy for debt collectors. collector stop using a particular § 1006.14(b) through (h), nonetheless Additionally, this type of conduct communication medium to trigger may violate § 1006.14(a) when such would undoubtedly harm consumers. It § 1006.14(a)’s general prohibition conduct is evaluated cumulatively with would not have been permitted by the against harassing, oppressive, or abusive other conduct. The comment further proposal and is not permitted by the conduct, the Bureau concludes that it is clarifies that such conduct can occur final rule. FDCPA section 806, as not necessary or warranted to add new through any communication medium implemented by § 1006.14(a), covers, commentary to specify this fact. the debt collector uses, including in- among other things, the debt collector’s For the reasons discussed above, the person interactions, telephone calls, use of any communication medium in Bureau is finalizing § 1006.14(a) largely audio recordings, paper documents, connection with the collection of a debt. as proposed, but with a minor mail, email, text messages, social media, Consequently, a debt collector would grammatical revision to more closely or other electronic media. The comment violate the FDCPA and Regulation F by align with the statute. Final § 1006.14(a) then provides an example in which the sending text messages or emails, making thus provides that a debt collector must debt collector places seven unanswered social media posts, or the like, if the not engage in any conduct the natural telephone calls within seven natural consequence of that conduct is consequence of which is to harass, consecutive days to a consumer in to harass, oppress, or abuse any person oppress, or abuse any person in connection with the collection of a debt in connection with the collection of a connection with the collection of a debt, and, during the same time period, sends debt. New final comments 14(a)–1 and including, but not limited to, the multiple additional unsolicited emails –2 further clarify this point. conduct described in § 1006.14(b) about the debt to the consumer, to Finally, the Bureau received a request through (h). In addition, as discussed, which the consumer does not respond. to clarify that § 1006.14(a) applies even the Bureau is finalizing new comments The comment notes that it is likely that if a consumer does not opt out of 14(a)–1 and –2 to clarify that the natural consequence of the receiving electronic debt collection cumulative effect of the debt collector’s communications or communication § 1006.14(a) applies, among other telephone calls and emails is to harass, attempts pursuant to the instructions in things, to a debt collector’s conduct in oppress, or abuse the person receiving § 1006.6(e) or exercise the right to using any medium of communication in them; when such natural consequence request that the debt collector stop using connection with the collection of a debt. occurs, the debt collector has violated a particular communication medium 14(b) Repeated or Continuous § 1006.14(a) and FDCPA section 806. under § 1006.14(h). The Bureau affirms Telephone Calls or Telephone The Bureau notes that, as discussed in that it does. Sections 1006.6(e) 364 and Conversations the section-by-section analysis of 1006.14(h) 365 provide consumers with 367 § 1006.14(b) setting forth the Bureau’s tools to limit or stop debt collectors FDCPA section 806(5) describes final rule regarding telephone call from communicating or attempting to one example of conduct prohibited by frequencies, the Bureau received communicate with them.366 Regardless section 806: Causing a telephone to ring thousands of comments from of whether a consumer uses such tools, or engaging any person in telephone consumers, consumer advocates, a local the final rule prohibits a debt collector conversation repeatedly or continuously government, a group of State Attorneys with intent to annoy, abuse, or harass General, members of Congress, and 364 Pursuant to § 1006.6(e), a debt collector who any person at the called number. other commenters expressing concern communicates or attempts to communicate with a Proposed § 1006.14(b) would have consumer electronically in connection with the implemented and interpreted FDCPA that the proposal—which included collection of a debt using a specific email address, numeric limits for debt collection telephone number for text messages, or other section 806(5)—and, by extension, the telephone calls but did not include electronic-medium address must include in such general prohibition on harassing numeric limits for debt collection communication or attempt to communicate a clear conduct in FDCPA section 806.368 and conspicuous statement describing a reasonable Specifically, proposed § 1006.14(b)(1) contacts through other communication and simple method by which the consumer can opt media—would have allowed debt out of further electronic communications or set forth the prohibition on placing collectors to send excessive or attempts to communicate by the debt collector to telephone calls or engaging any person unlimited text messages and emails, or that address or telephone number. in telephone conversation repeatedly or 365 Section 1006.14(h)(1) provides that, in continuously with intent to annoy, otherwise inundate consumers with connection with the collection of any debt, a debt these electronic communications. Some collector must not communicate or attempt to abuse, or harass; § 1006.14(b)(2) commenters expressed concern, for communicate with a person through a medium of described bright-line frequency limits example, that debt collectors would communication if the person has requested that the for telephone calls and telephone debt collector not use that medium to communicate program their systems to send multiple with the person. conversations during a seven-day emails per second and cause consumers’ 366 A consumer may also notify a debt collector period; and proposed § 1006.14(b)(3) data and text messaging plans to be in writing that the consumer wants the debt through (5) described telephone calls maxed out, preventing consumers from collector to cease further communication with the excluded from the frequency limits, the consumer, and pursuant to § 1006.6(c)(1), a debt using their devices. collector must not communicate or attempt to The Bureau understands that few debt communicate further with a consumer with respect 367 15 U.S.C. 1692d(5). collectors currently send electronic to such debt. 368 See 84 FR 23274, 23308–21 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76802 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

effect of complying with the frequency message (e.g., a text message or an As noted above, section 806(5) of the limits, and a definition, respectively. email) to a mobile telephone. FDCPA prohibits a debt collector from As discussed in detail in the section- The Bureau received comments ‘‘causing a telephone to ring or engaging by-section analysis of final questioning whether the phrase any person in telephone conversation § 1006.14(b)(1) through (4), the Bureau ‘‘placing a telephone call’’ in proposed repeatedly or continuously with intent is finalizing its proposal regarding commentary to § 1006.14(b)(1) also to annoy, abuse, or harass any person at telephone call frequencies with applied to the bright-line telephone call the called number.’’ 370 The focus on revisions in light of feedback. Among frequency limits in proposed telephone calls suggests that the other things, rather than finalizing a § 1006.14(b)(2), which used similar provision was meant to apply to bright-line rule for permissible and language. The Bureau intended communications that present the prohibited telephone call frequency, the proposed comment 14(b)(1)–1 to apply opportunity for the parties to engage in Bureau is finalizing telephone call to the concept of placing a telephone a live telephone conversation or that frequencies in the form of a rebuttable call everywhere that concept is used in result in an audio message. Ringless presumption that a debt collector has § 1006.14(b). Therefore, the Bureau is voicemails are audio messages that either complied with or violated the renumbering proposed comment allow debt collectors to bypass a prohibition in § 1006.14(b)(1) regarding 14(b)(1)–1 as comment 14(b)–1 and is person’s opportunity to answer the repeated or continuous telephone calls revising it to clarify that the telephone by connecting directly to the and telephone conversations. interpretation applies throughout person’s voicemail. Even telephone calls In this section-by-section analysis, the § 1006.14(b). that result in an audio message without Bureau addresses feedback regarding Ringless voicemails. The Bureau an audible ring, if made repeatedly and proposed comment 14(b)(1)–1, which, received a number of comments continuously, nonetheless may be for the reasons discussed below, the regarding its proposal in comment intended to harass or may have the Bureau is finalizing, with revisions, as 14(b)(1)–1 to interpret the phrase natural consequence of harassing a comment 14(b)–1. The Bureau also ‘‘placing a telephone call’’ to apply to person in ways that the FDCPA addresses feedback regarding proposed ringless voicemails. Some industry prohibits, particularly if, for example, § 1006.14(b)(1)(ii) and (4), which the commenters argued that the consumer the messages contain similar content Bureau is not finalizing as part of this experience with ringless voicemails is and do not provide new information to rule. Public comments regarding all fundamentally different—and better— the person receiving the messages. The other aspects of proposed § 1006.14(b) than with telephone calls and that Bureau recognizes that its interpretation are addressed in turn in the section-by- ringless voicemails therefore should not of FDCPA section 806(5) may result in section analysis of final § 1006.14(b)(1) be subject to telephone call frequency compliance challenges for a small through (4). limits. They explained that a ringless number of debt collectors who place telephone calls and ringless voicemails Final Comment 14(b)–1 voicemail is more like an email or text message than a telephone call. As using different systems and different As noted, proposed § 1006.14(b)(1) described by one commenter, with a vendors. However, the Bureau expects contained the provision implementing ringless voicemail, a consumer only that those debt collectors will be able to FDCPA section 806(5). Specifically, as receives a new voicemail according to overcome such challenges by proposed, § 1006.14(b)(1)(i) provided the consumer’s prescribed preferences, developing new tracking systems; that, in connection with the collection and, after receiving a new voicemail, the modifying their business models to use of a debt, a debt collector must not place consumer can then choose if, when, and either telephone calls or ringless telephone calls or engage any person in how the actual voicemail message voicemails but not both; or using both telephone conversation repeatedly or content is presented. The commenter in volumes that, even if combined, continuously with intent to annoy, explained that, in most ringless would be unlikely to create a violation. abuse, or harass any person at the called voicemail applications, a consumer can Communication media other than number.369 As discussed further in the swipe away any voicemail the consumer telephone calls. The Bureau received a section-by-section analysis of final does not wish to read, listen to, or large number of comments regarding its § 1006.14(b)(1), proposed otherwise engage with, just like a proposal in comment 14(b)(1)–1 to § 1006.14(b)(1)(i) thus largely restated consumer can do with an email or text interpret the phrase ‘‘placing a FDCPA section 806(5), except that, message. This commenter also noted telephone call’’ not to include sending whereas the statute prohibits ‘‘[c]ausing compliance challenges with tracking the an electronic message (e.g., a text a telephone to ring,’’ proposed cumulative number of telephone calls message or an email) to a mobile § 1006.14(b)(1)(i) would have applied and ringless voicemails, given that the telephone, as well as its decision to not when a debt collector ‘‘place[s] two types of calls are placed through otherwise propose specific frequency telephone calls.’’ This interpretation independent systems run by different limits for communication media other meant that the proposed prohibition vendors. The commenter said that, if than telephone calls. would have applied even if a debt debt collectors have to track both Consumer, consumer advocate, State collector’s telephone call did not cause telephone calls and ringless voicemails, and local government, and State a traditional ring, as long as the they will opt to use one over the other Attorneys General commenters stated telephone call connected to the dialed instead of dealing with the complexities that the Bureau should impose number. Proposed comment 14(b)(1)–1 frequency limits on electronic of cross channel frequency limit 371 would have clarified that, for purposes tracking. However, other industry communication media. State of the proposed telephone call commenters, Federal government Attorneys General commenters frequency limits, ‘‘placing a telephone agency staff, local government described the prohibition in proposed call’’ includes conveying a ringless commenters, a group of consumer § 1006.14(a)—which would have voicemail (or ‘‘voicemail drop’’) but advocate commenters, and other 370 does not include sending an electronic 15 U.S.C. 1692d(5). commenters supported the proposal to 371 Some of these commenters stated more clarify that ‘‘placing a telephone call’’ broadly that the Bureau should apply frequency 369 See id. at 23308. includes conveying a ringless voicemail. limits to all forms of communication media.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76803

covered, and as finalized does cover, virtually costless.373 Some commenters proposed opt-out provision in electronic communications—as also observed that, absent a numeric § 1006.6(e) and the general prohibition insufficient to protect consumers from limit on electronic communications, against conduct the natural consequence excessive electronic communications, consumers with limited or pay-per- of which is to harass, oppress, or abuse noting that FDCPA section 806 has been service plans—who tend to be lower- any person in connection with the difficult to apply in any context and has income and more likely to be subject to collection of a debt in proposed resulted in a significant amount of debt collection—will incur costs when § 1006.14(a), along with FDCPA section litigation and conflicting court opinions. debt collectors send text messages and 806, would impose sufficient limits on One Federal government commenter emails.374 a debt collector’s use of electronic reasoned that ‘‘placing a telephone call’’ Consumer advocates recommended communications. should include sending a text message that, if the Bureau does not impose Industry commenters asserted that a because the FCC has interpreted the numeric frequency limits on electronic numeric frequency limit on electronic phrase ‘‘mak[ing] any call’’ in the TCPA communications, the Bureau should at communication media would harm as encompassing the sending of text least require debt collectors to report on consumers.377 Many of these industry messages.372 their use of emails, text messages, and commenters explained that consumers direct messages. Consumer advocates prefer to communicate through Commenters criticized the Bureau’s also encouraged the Bureau to consider electronic media because they can rationale for not proposing to impose specific limits in the future if debt interact with and respond to an numeric limits on electronic collectors abuse these communication electronic message when it is most communications. In the proposal, the media. convenient. If the Bureau were to Bureau grounded its justification in the The Bureau received a large number impose numeric frequency limits on specific language of FDCPA section of comments from the credit and electronic communications, it could 806(5), which the Bureau believed collections industry expressing general discourage debt collectors from utilizing indicated Congress’s intention to apply support for the Bureau’s proposal not to such media to communicate with the provision to communications that apply numeric frequency limits to consumers. Other industry commenters present the opportunity for the parties communication media other than explained that the ability to to engage in a live telephone telephone calls.375 Many industry communicate by email and text message conversation or that result in an audio commenters distinguished electronic will offset the negative impacts of the message. The Bureau also explained that communications from telephone calls, proposed telephone call frequency it was not aware of debt collectors arguing that, unlike telephone calls, limits, such as the inability to establish sending electronic messages to electronic communication media do not contact with consumers.378 Some consumers repeatedly or continuously harass consumers because they are industry commenters cautioned that, if with intent to harass them or to cause passive communications that consumers communications are restricted too substantial injury. Commenters asserted can engage with at their convenience or much, debt collectors will instead file that the Bureau’s reasoning for can opt out of receiving entirely.376 lawsuits against consumers to collect proposing telephone call frequency Industry commenters argued that the the debts. limits is equally applicable to electronic The Bureau declines to impose communication media, arguing that 373 Some commenters recommended specific numeric limitations on a debt collector’s electronic communications are not less numeric limits for electronic communications, use of electronic communication media intrusive than telephone calls because ranging from one per week to two per day, or or of a combination of telephone calls consumers often receive notifications specific numeric limits for cumulative communications across all communication media, and electronic communication media. when they get text messages or emails ranging from two per week to one per day. Because debt collectors do not presently that interrupt what they are doing and 374 To address concerns about the cost of text engage in widespread use of electronic require them to assess whether such messaging, at least one consumer advocate communications, the Bureau concludes communications need immediate commenter requested that the Bureau require debt collectors to use FTEU text messaging. Members of that it does not have sufficient attention. Some commenters also Congress stated that the Bureau, by not requiring information to warrant applying criticized the Bureau’s justification that FTEU text messaging, is placing the cost burden of numeric limitations to electronic there is little, if any, evidence that text messages on consumers. More generally, a large communications. However, the Bureau electronic communications harm number of commenters identified a consumer’s lack of consent to electronic communications as a reiterates that FDCPA section 806 and consumers, arguing that the only reason significant concern and requested that the Bureau § 1006.14(a) apply to debt collectors’ evidence is lacking is because such require consumers to opt into receiving such conduct in using such media,379 and the communication media are not communications from debt collectors. The Bureau final rule contains several other specifically contemplated under current addresses these comments in the section-by-section analysis of § 1006.6, which discusses provisions designed to curb harassment law and thus not yet widely used by communications in debt collection generally. industry. 375 However, one industry commenter 377 One industry commenter asked the Bureau to A group of State Attorneys General acknowledged that the scope of FDCPA section 806 provide a safe harbor when the frequency of a debt and 806(5) is broad enough to include modern collector’s electronic communications is at or below and State and local government communication media such as emails and text the proposed telephone call frequency limits commenters, among others, predicted messages if they are used to harass, oppress, or without a corresponding per se violation or that, if the Bureau did not impose abuse a person in connection with the collection of presumption of a violation when the frequency of numeric limits on electronic debt a debt. Another industry commenter agreed but a debt collector’s electronic communications is cautioned the Bureau against attributing carrier above the proposed limits. collection communications or errors, such as sending the same text message 378 However, at least one industry commenter communication attempts, debt multiple times, to the debt collector. disagreed and explained that debt collectors may collectors would rely on them heavily; 376 See the section-by-section analysis of § 1006.6. not have valid, personal email addresses for all some of these commenters explained Industry commenters made similar points about accounts and may be unable to send text messages that electronic communications are communications by mail. Since the Bureau did not to certain telephone numbers. receive comments suggesting that communications 379 In particular, new comments 14(a)–1 and –2 solely by mail should be subject to particular address many policy concerns raised by 372 See, e.g., In re Rules and Regulations weekly frequency limits, the Bureau does not stakeholders about how the proposal would have Implementing the Tel. Consumer Prot. Act of 1991, further address those comments in this section-by- treated debt collectors’ use of text messages and 18 FCC Rcd. 14,014, 14,115 ¶ 165 (2003). section analysis. other electronic communication media.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76804 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

from electronic communications and or practice, a debt collector must not the person at the called number. In light empower consumers to restrict debt exceed the bright-line telephone call of this change, the Bureau has collection communications.380 The frequency limits that were set forth in determined that it is not necessary to Bureau also intends to actively monitor proposed § 1006.14(b)(2).383 also identify the conduct described in the market and to gather information on As discussed in the section-by-section FDCPA section 806(5) or § 1006.14(b) as these electronic communications in analysis of § 1006.1(c), while some an unfair, deceptive, or abusive act or general so that it may determine in the commenters supported the Bureau’s practice under section 1031 of the future whether numeric limitations on proposed use of its Dodd-Frank Act Dodd-Frank Act or to find that the electronic communications are section 1031 authority, a number of telephone call frequencies will prevent necessary and warranted and, if so, industry commenters expressed concern such an unfair act or practice. what specific numeric limitations the that the Bureau’s proposed use of its Accordingly, the Bureau is not Bureau should consider. Dodd-Frank Act section 1031 authority finalizing proposed § 1006.14(b)(1)(ii) For the reasons discussed above, the could—despite the stated limits of the and is renumbering the FDCPA standard Bureau is finalizing proposed comment proposal as only applying to FDCPA in proposed § 1006.14(b)(1)(i) as final 14(b)(1)–1 as final comment 14(b)–1 debt collectors—lead, if finalized, to § 1006.14(b)(1). with minor revisions to provide that provisions that relied on such authority, Effect of complying with telephone ‘‘placing a telephone call’’ for purposes including the prohibitions on unfair, call frequencies. Proposed of § 1006.14(b) includes conveying a deceptive, and abusive acts and § 1006.14(b)(4) 385 would have clarified ringless voicemail but does not include practices under section 1031 of the that a debt collector who did not exceed sending an electronic message (e.g., a Dodd-Frank Act, being applied to first- the telephone call frequency limits text message or an email) that may be party debt collectors. These commenters described in proposed § 1006.14(b)(2) received on a mobile telephone.381 urged the Bureau to adopt proposed complied with § 1006.14(b)(1) and § 1006.14(b)(1) using only its FDCPA FDCPA section 806(5) and did not, Proposed Provisions Not Finalized authority. The Bureau understands based on the frequency of its telephone Identification and prevention of commenters’ concerns that conduct the calls, violate § 1006.14(a), FDCPA Dodd-Frank Act unfair act or practice. Bureau deemed to be prohibited by the section 806, or sections 1031 or As noted above, proposed FDCPA and the Dodd-Frank Act when 1036(a)(1)(B) of the Dodd-Frank Act.386 § 1006.14(b)(1) set forth the prohibition undertaken by FDCPA debt collectors Because the Bureau is not finalizing the regarding repeated or continuous could be construed also to be prohibited proposed bright-line frequency limits telephone calls and telephone when undertaken by other entities for telephone calls, the Bureau is not conversations, with proposed collecting debts, even if they are not finalizing proposed § 1006.14(b)(4) § 1006.14(b)(1)(i) largely restating the FDCPA debt collectors. In response to regarding the effects of complying with text of the prohibition in FDCPA section commenters’ concerns, the Bureau those limits. As discussed in the 806(5). The Bureau proposed notes, as discussed elsewhere in this section-by-section analysis of § 1006.14(b)(1)(ii), in turn, to identify, Notice,384 that the FDCPA recognizes § 1006.14(b)(1), however, the Bureau is for FDCPA debt collectors who were the special sensitivity of incorporating similar concepts in newly also covered by the Dodd-Frank Act, the communications by FDCPA debt adopted comments 14(b)(1)–1 and –2 conduct articulated in FDCPA section collectors relative to communications by and as part of final § 1006.14(b)(2). 806(5) as an unfair act or practice under creditors, and, therefore, the FDCPA 14(b)(1) In General section 1031 of the Dodd-Frank Act.382 provides protections for consumers As proposed, § 1006.14(b)(1)(ii) receiving such communications from Proposed § 1006.14(b)(1)(i) would provided that, to prevent the unfair act debt collectors but not creditors. have implemented the statutory Moreover, as noted above, and as is prohibition in FDCPA section 806(5) by 380 For example, under § 1006.6(e), a debt discussed in detail below, the Bureau providing that, in connection with the collector who communicates or attempts to collection of a debt, a debt collector communicate with a consumer electronically in has determined to finalize a rebuttable- connection with the collection of a debt using a presumption approach in must not place telephone calls or engage specific email address, telephone number for text § 1006.14(b)(2), rather than a bright-line any person in telephone conversation messages, or other electronic-medium address must rule, regarding telephone call repeatedly or continuously with intent include in such communication or attempt to frequencies. As discussed in the section- to annoy, abuse, or harass any person at communicate a clear and conspicuous statement 387 describing a reasonable and simple method by by-section analysis of § 1006.14(b)(2), the called number. As discussed which the consumer can opt out of further whether the presumption of compliance above, the Bureau is finalizing proposed electronic communications or attempts to or of a violation, as applicable, may be § 1006.14(b)(1)(i) renumbered as communicate by the debt collector to that address § 1006.14(b)(1). For the reasons or telephone number. In addition, § 1006.14(h)(1) rebutted depends upon the relevant provides that, in connection with the collection of facts and circumstances. Furthermore, discussed below, the Bureau is any debt, a debt collector must not communicate or the final rule specifies non-exhaustive finalizing the text of § 1006.14(b)(1)(i) as attempt to communicate with a person through a factors that, considered together with proposed but is adopting new comments medium of communication if the person has whether the frequency of a debt 14(b)(1)–1 and –2 to clarify the requested that the debt collector not use that interaction of final § 1006.14(b)(1) and medium to communicate with the person. A collector’s telephone calls exceeded or 388 consumer may also notify a debt collector in writing was within the rule’s specified (2). that the consumer wants the debt collector to cease frequencies, are relevant to determining further communication with the consumer, and 385 whether a debt collector’s conduct See 84 FR 23274, 23319 (May 21, 2019). pursuant to § 1006.6(c)(1), a debt collector must not 386 12 U.S.C. 5531, 5536(a)(1)(B). communicate or attempt to communicate further violated the prohibition in FDCPA 387 See 84 FR 23274, 23308 (May 21, 2019). with a consumer with respect to such debt. section 806(5) and final § 1006.14(b)(1), 388 In addition to the issues discussed in this 381 Unlike proposed comment 14(b)(1)–1, final including whether the debt collector section-by-section analysis, the Bureau reiterates comment 14(b)–1 does not refer to section 1031 of had the intent to annoy, abuse, or harass that, for the reasons discussed in the section-by- the Dodd-Frank Act because, as discussed section analysis of § 1006.14(b), the Bureau is elsewhere in this section-by-section analysis, the finalizing the proposal to interpret FDCPA section Bureau is not relying on its Dodd-Frank Act section 383 See 84 FR 23274, 23309 (May 21, 2019). 806(5)’s prohibition against ‘‘causing a telephone to 1031 authority to finalize any part of § 1006.14. 384 See, e.g., the section-by-section analysis of ring’’ to be a prohibition against ‘‘placing telephone 382 12 U.S.C. 5531(b), (c). § 1006.6(d)(3) through (5). calls.’’

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76805

Consistent with FDCPA section FDCPA section 806(5) may be rebutted, § 1006.14(a) and FDCPA section 806’s 806(5), proposed § 1006.14(b)(1)(i) based on the facts and circumstances. general prohibition solely with respect would have applied to telephone calls Some industry commenters asked the to the frequency of its telephone calls. placed by a debt collector to any person, Bureau to define the term telephone The comment further clarifies that the not just to the consumer. Thus, as conversation that appears in debt collector nevertheless could violate proposed, § 1006.14(b)(1)(i) would have § 1006.14(b)(1). A group of consumer § 1006.14(a) and FDCPA section 806 if applied to, among other things, advocates suggested the term should the natural consequence of another telephone calls placed to obtain location include any time the consumer answers aspect of its telephone calls, unrelated information about a consumer as the debt collector’s telephone call, even to frequency, is to harass, oppress, or described in § 1006.10. Federal if the debt is not discussed. The term abuse any person in connection with the government agency staff supported this telephone conversation in final collection of a debt. Comment 14(b)(1)– approach. One individual commenter § 1006.14(b)(1) comes directly from 2 provides an illustrative example. expressed concern that a consumer FDCPA section 806(5) and has the same would be negatively affected if a debt meaning as it does in the statute. To be 14(b)(2) Telephone Call Frequencies; collector placed numerous location clear, however, the term is not Presumptions of Compliance and of a information calls to the consumer’s synonymous with a debt collection Violation employer. A group of consumer communication, as defined in FDCPA advocates recommended that the Bureau section 803(2) and implemented in final FDCPA section 806 393 prohibits a limit location information calls to third § 1006.2(d). A debt collection broad range of debt collection parties to one telephone call attempt per communication occurs if information communication practices that harm third party per week, while another regarding a debt is conveyed directly or consumers and others. Section consumer advocate commenter indirectly to any person through any 806(5),394 in particular, prohibits debt recommended that location information medium. If a debt collector leaves a collectors from causing a telephone to calls to third parties be prohibited voicemail for a consumer that includes ring or engaging a person in telephone altogether. Some commenters, including details about the debt, the debt collector conversation repeatedly or continuously individuals and a consumer advocate has engaged in a debt collection with intent to annoy, abuse, or harass. commenter, incorrectly stated that the communication with the consumer but Proposed § 1006.14(b)(2) would have set proposal would permit ‘‘unlimited’’ has not had a telephone conversation. forth bright-line frequency limits for telephone calls to third parties. Likewise, if a consumer answers a debt debt collection telephone calls.395 In response to commenters’ concerns, collector’s telephone call and, before the Bureau notes that FDCPA section Proposed § 1006.14(b)(2) provided that, anything else is said, asks the debt subject to exclusions in proposed 806(5) protects ‘‘any person’’ from such collector to call back in 10 minutes, the conduct. Because FDCPA section 806(5) § 1006.14(b)(3), a debt collector violates debt collector has engaged in a the FDCPA section 806(5) prohibition does not distinguish between a debt telephone conversation with the implemented in proposed collector’s conduct toward third parties consumer but may not have had a debt § 1006.14(b)(1)(i) and the unfair act or and consumers, the Bureau is applying collection communication. practice under section 1031 of the the same telephone call standards to all Several industry commenters also telephone calls placed by debt collectors raised hypothetical questions asking Dodd-Frank Act the Bureau proposed to in connection with the collection of a whether particular types of telephone identify in § 1006.14(b)(1)(ii) by debt.389 Consistent with FDCPA section calls would count as ‘‘placed’’ for exceeding the telephone call frequency 804, the final rule places additional purposes of § 1006.14(b)(1) and, in turn, limits in proposed § 1006.14(b)(2). limits on telephone calls to third parties for purposes of the proposed telephone Specifically, proposed § 1006.14(b)(2)(i) for the purpose of acquiring location call frequency limits in § 1006.14(b)(2). provided that, subject to exclusions, a information.390 The Bureau also notes Elsewhere in § 1006.14(b), the Bureau is debt collector must not place a that, as discussed in the section-by- adopting new commentary clarifying telephone call to a person 396 more than section analysis of § 1006.14(b)(2), a how to count placed telephone calls. seven times within seven consecutive debt collector’s presumption of That commentary further clarifies when days in connection with the collection compliance with § 1006.14(b)(1) and a debt collector has placed a telephone of a particular debt. Proposed call or engaged in a telephone § 1006.14(b)(2)(ii) provided that, subject 389 Given the interplay between proposed conversation for purposes of to exclusions, a debt collector must not § 1006.14(b)(1) and (2), the application of proposed 391 § 1006.14(b)(1)(i) to any person would have meant § 1006.14(b). place a telephone call to a person in that the proposed telephone call frequency limits in For the reasons discussed above, the connection with the collection of a § 1006.14(b)(2) also would have applied to Bureau is finalizing the text of proposed particular debt within a period of seven telephone calls placed by a debt collector to any § 1006.14(b)(1)(i) as final person. Likewise, the telephone call frequencies in consecutive days after having had a final § 1006.14(b)(2) apply to location information § 1006.14(b)(1). The Bureau is also telephone conversation with that person calls and balance a debt collector’s potential need adding new comments 14(b)(1)–1 and in connection with the collection of to obtain information about a consumer necessary –2 to clarify the effect of complying such debt (with the date of the to establish right party contact with the potentially with § 1006.14(b)(1).392 harassing effect such calls may have directly on the telephone conversation being the first third party, or indirectly on the consumer. Specifically, comment 14(b)(1)–1 390 provides that a debt collector who See the section-by-section analysis of 393 15 U.S.C. 1692d. § 1006.10. Pursuant to § 1006.10(c), a debt collector complies with final § 1006.14(b)(1) and 394 15 U.S.C. 1692d(5). communicating with any person other than the FDCPA section 806(5)’s specific 395 consumer for the purpose of acquiring location See 84 FR 23274, 23309 (May 21, 2019). information about the consumer must not prohibition also complies with final 396 Proposed § 1006.14(b)(2) would have applied communicate more than once with such person not only to debt collection calls placed to unless requested to do so by such person, or unless 391 See the section-by-section analysis of final consumers who owe or are alleged to owe debt, but the debt collector reasonably believes that the § 1006.14(b)(4). to any person (with certain exceptions described earlier response of such person is erroneous or 392 As discussed in the section-by-section analysis below). See the section-by-section analysis of incomplete and that such person now has correct of § 1006.14(b), the Bureau is renumbering § 1006.14(b)(1) for further discussion on this aspect or complete location information. proposed comment 14(b)(1)–1 as comment 14(b)–1. of the proposal.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76806 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

day of the seven-consecutive-day consistently interpreted the provision, inflexible and noted a preference for a period).397 industry needs more clarity and multi-factor approach to telephone call The Bureau requested comment on all certainty, and a bright-line limit will frequencies. These commenters were aspects of proposed § 1006.14(b)(2), provide relief to consumers. One concerned that the bright-line approach including on whether the Bureau should consumer advocate commented that a would limit a debt collector’s ability to adopt a rebuttable-presumption bright-line rule ran counter to the reach consumers at different times and approach in lieu of the proposed bright Bureau’s observations elsewhere in the on different dates, and that it would lines,398 and if so, whether the Bureau proposal about the importance of hinder communication particularly in should retain any of the exclusions context in determining whether a the context of settlement negotiations, described in proposed § 1006.14(b)(3). particular contact is abusive or loss mitigation discussions, and The Bureau received thousands of harassing, but nonetheless found merit litigation. A credit union commenter comments from a variety of stakeholders in the Bureau seeking to develop a expressed concern that a bright-line about the proposed telephone call bright-line rule on the number of approach ignored the nature and frequency limits, including about the permitted telephone calls. The SBA content of the telephone conversation, merits of a bright-line rule versus a suggested that more exceptions were which the commenter asserted is more rebuttable-presumption approach and needed for a bright-line limit to work, instructive as to whether successive about the specific proposed limits. particularly for law firms trying to telephone calls have the effect of Commenters addressed both the negotiate settlements. harassment, oppression, or abuse. proposed seven telephone call weekly Some industry commenters opposed a Several industry commenters frequency limit and the proposed one bright-line rule conceptually because advocated for a rule that would make telephone conversation weekly they asserted that it would depart from telephone calls within particular limits frequency limit. Notably, commenters the statutory language in FDCPA section per se compliant but allow debt voiced stronger criticisms of the 806(5), which contains an express intent collectors to rebut the presumption that proposed seven telephone call weekly requirement. They commented that calls in excess of any call frequency frequency limit, with most commenters FDCPA jurisprudence has established limit violate the FDCPA. One of these opposing it because in their view it was that there is no bright-line number of commenters claimed that the proposal either too high (i.e., too permissive) or telephone calls to demonstrate whether would have deemed non-harassing too low (i.e., too restrictive). a debt collector had the intent to harass telephone calls in excess of the In light of feedback, and for the and that courts have found that placing proposed frequency limits a per se reasons discussed below, the Bureau is more than seven telephone call attempts violation and therefore would have been finalizing proposed § 1006.14(b)(2) to in seven days is not harassing or inconsistent with FDCPA section 806(5). retain the proposed telephone call abusive. These commenters described Another commenter disputed that the frequencies but to replace the bright-line how case law has established factors to Bureau properly could conclude that rule with an approach under which a consider when determining whether a every telephone call above the proposed debt collector who places telephone debt collector had the requisite intent, limits would be problematic. The calls or engages in telephone such as the pattern and frequency of commenter urged the Bureau to permit conversations: (1) Within those telephone calls, the time between calls, a debt collector to make additional frequencies has a rebuttable the presence or absence of abusive telephone calls if the debt collector presumption of compliance with language on those calls, the location to concludes that there is a compelling FDCPA section 806(5) and which those calls were placed, and reason to do so and that doing so will § 1006.14(b)(1); and (2) in excess of one whether the debt collector called back not harm the consumer, provided that or both of those frequencies has a after the recipient hung up. the debt collector appropriately rebuttable presumption of a violation of One industry trade group commenter documents the basis for its decision. FDCPA section 806(5) and took a different approach, A group of consumer advocates § 1006.14(b)(1). acknowledging that using a bright-line commented that a bright-line rule is Comments Regarding Bright-Line Rule ‘‘number-of-calls’’ surrogate to generally in the best interest of determine either the debt collector’s consumers. However, the group also Commenters spanning a wide awareness of natural consequences or pointed out that setting the limits on a spectrum of stakeholders—including the debt collector’s intent may be debt collectors, industry trade groups, per-debt basis, as proposed, would appropriate if the telephone number is insulate from liability a debt collector consumer advocates, and a group of known by the debt collector to belong to State Attorneys General—conceptually who was collecting on seven accounts the consumer. This may be the case if even if the debt collector made the supported a bright-line rule. A variety of the debt collector had prior contact with reasons were cited by the different maximum allowable 49 calls per week, the consumer at that number or if the every week, with the intent to annoy, commenters, including that FDCPA consumer is identified in a voicemail section 806(5) is vague, courts have not abuse, or harass. These commenters greeting. However, this commenter urged the Bureau to provide in the rule asserted that, if a telephone number is that complying with the telephone call 397 For ease of reference in this part of the section- not known to belong to the consumer, by-section analysis, the Bureau sometimes refers to frequency limits would create only a the limit in proposed § 1006.14(b)(2)(i) as the and especially if the debt collector has rebuttable presumption of compliance ‘‘proposed seven telephone call weekly frequency several possible numbers for the with § 1006.14(b)(1) and FDCPA section limit,’’ the limit in proposed § 1006.14(b)(2)(ii) as consumer provided either by the 806(5).399 the ‘‘proposed one telephone conversation weekly creditor or a prior debt collector or frequency limit,’’ and the two limits together as the ‘‘proposed telephone call frequency limits.’’ obtained through the debt collector’s 399 This commenter also argued that the 398 The Bureau requested comment on different own location efforts, then the proposed telephone call frequency limits in proposed variations, such as adopting only a rebuttable bright-line rule is at odds with the § 1006.14(b)(2) should not create a safe harbor presumption of a violation or only a rebuttable statutory mandate because there would under the general prohibition in proposed presumption of compliance. In the proposal, the § 1006.14(a) or FDCPA section 806, because it rebuttable-presumption alternative was discussed be no intent to annoy, abuse, or harass. would be possible to violate these general in the section-by-section analyses of proposed Some industry commenters found the prohibitions even while complying with the § 1006.14(b)(2) and § 1006.14(b)(4). proposed bright-line rule to be too telephone call frequency limits. As support, the

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76807

The same group of consumer willingness to pay their debts to connect additional telephone calls with intent to advocates expressed concern that under by telephone with a representative to annoy, abuse, or harass. the proposed bright-line rule, debt achieve a voluntary repayment schedule Some commenters raised the concern collectors who placed telephone calls and thus avoid legal collection efforts. that, for a consumer with five debts within the specific proposed frequency Industry commenters wrote that the being collected by the same debt limits would not be liable even if they proposed limit would provide a debt collector, the permissible call volume placed those calls in rapid succession. collector with multiple opportunities to for that debt collector would surpass the The group also noted that debt connect with the consumer and give the threshold for potential violations of collectors could target their successive debt collector time to work through FDCPA section 806(5). These telephone calls on weekends or multiple telephone numbers. Other commenters explained that courts have holidays, which might be more likely to commenters, including some found as few as three to six telephone harass consumers. Another consumer consumers, believed the proposed limit calls per week to be harassing and cited advocate commented that it was less would prevent harassment. Some to existing frequency limits in likely that a debt collector would use all industry commenters thought the Massachusetts, Washington State, and of its permissible telephone calls on the proposed limit would reduce New York City as models for the same day if the frequency limit for unnecessary litigation. Others urged the Bureau. Some commenters discussed weekly telephone calls was lower than Bureau not to impose a lower limit than how technology advances may make what the Bureau proposed (this proposed because doing so, they consumers’ experience of receiving commenter suggested an alternative asserted, would mean less opportunity repeated telephone calls more harassing. limit of three), but cautioned that, if a for consumers to work out a payment They noted that consumers often carry debt collector made seven telephone plan and might lead to unintended their mobile telephones with them, calls in one day, it would often be harmful impacts on consumers and the making frequent calls less necessary and perceived as harassment by the economy if it were to hamper the more harassing; that the use of cloud- consumer. A few industry commenters efficiency of the debt collection process. based services to link devices means stated that it would be unlikely for debt In contrast, as noted above, a that one message can notify a consumer collectors to make rapid succession significant number of commenters multiple times; and that dialers can lead telephone calls under a bright-line rule opposed the proposed seven telephone to repeated and annoying telephone because that would use up the limited call weekly frequency limit. Many calls. number of weekly telephone call commenters argued that the proposed Commenters, including legal aid attempts available to debt collectors. limit was too high (i.e., too permissive). providers, consumer advocates, and One commenter asserted that debt Many others argued that it was too low consumers, among others, described a collectors would strategically space (i.e., too restrictive). plethora of ways that the proposed their telephone calls throughout the A diverse group of stakeholders seven telephone call weekly frequency seven-day period to establish contact criticized the proposed seven telephone limit would negatively impact with the consumer. A nonprofit call weekly frequency limit as too consumers. Some commenters claimed commenter, writing on behalf of a permissive to provide meaningful the number of potential telephone calls variety of stakeholders, expressed consumer protection. Thousands of would cause various social and concern that imposing a bright-line limit consumers opposed the proposed seven emotional effects, such as overwhelming on telephone calls and providing a safe telephone call weekly frequency limit stress; anxiety; emotional distress, harbor for compliance under that limit because it would, in their view, allow withdrawal, and social isolation; harms might encourage debt collectors to place debt collectors to harass consumers by to one’s social well-being and mental the maximum permissible telephone calling them up to seven times per health; and physical health problems, call attempts, perhaps more than they week, per debt. Other commenters including susceptibility to disease as a would have placed without such a limit criticized the proposed limit as applied result of chronic stress and sleep in place. to a consumer with multiple debts in disruptions. Some commenters cited collection, observing, for example, that lower work productivity as an effect of Comments Regarding Proposed Seven the proposed limit would have the number of potential telephone calls, Telephone Call Weekly Frequency Limit permitted debt collectors to call a because consumers could not easily turn Some consumer and industry consumer with eight medical debts 56 off their mobile telephones to avoid commenters supported the proposed times per week, or a consumer with five telephone calls due to their need to seven telephone call weekly frequency overdue bills 35 times per week. remain reachable to work colleagues limit in proposed § 1006.14(b)(2)(i).400 A Commenters, including consumers, and family. Commenters also stated that debt buyer commenter stated the belief consumer advocates, legal aid providers, the number of potential telephone calls that the proposed limit would strike an members of Congress, State Attorneys would negatively affect certain subsets appropriate balance by enabling General, academic institutions, an FTC of consumers. Some expressed concern consumers who demonstrate a Commissioner, and local governments, that the number of potential telephone expressed concern that the proposed calls would lead to consumers being commenter pointed to rapid succession calling. limit would lead to an excessive number pressured or coerced into paying even if Comments about the interplay between proposed of telephone calls. Some commenters their income is exempt from § 1006.14(a) and (b) are addressed in the section-by- section analysis of final § 1006.14(b)(1). believed this proposed limit would garnishment under Federal law— 400 In some instances, where commenters encourage debt collectors to engage in especially seniors and disabled addressed the proposed telephone call frequency FDCPA-prohibited behavior. For individuals who are particularly limits, it was not clear whether they were example, a group of State Attorneys vulnerable to abusive debt collection addressing the proposed seven telephone call weekly frequency limit, the proposed one telephone General noted that the proposal practices and who may be unaware of conversation weekly frequency limit, or both acknowledged that debt collectors are such protection. One local government proposed limits. Where it was not clear which aware that many consumers have commenter asserted that the proposed proposed limit the commenter was addressing, multiple debts in collection and are limit would disproportionately affect generally the comments are summarized in the section-by-section analysis describing the proposed receiving telephone calls from other lower-income and minority consumers. seven telephone call weekly frequency limit. debt collectors and thus may place Several commenters explained that

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76808 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

lower-income consumers often have seven telephone calls per week per debt government has operated for decades limited telephone plans, meaning that a would be excessive and permit under a limit of two contacts about a high number of telephone calls may harassing tactics in the absence of debt per seven-day calendar period. cause their plans to trigger a maximum additional limits on electronic Industry trade groups and other limit or fill their voicemail boxes. communications. A group of State industry commenters generally opposed Some commenters argued that there is legislators and several consumer the proposed seven telephone call little to no evidence that debt collectors’ advocate commenters identified the weekly frequency limit, arguing it was ability to collect would be negatively number of telephone calls for student too restrictive. The Bureau received impacted if the proposed limit was set loan and medical debt that would be hundreds of comments from industry at a number less than seven. Several permitted under the proposal as stakeholders who expressed concern consumer and nonprofit commenters particularly concerning. Others that the proposed telephone call asserted that a high number of explained that it is common for seniors frequency limits were too constraining. telephone calls does not result in in particular to have several medical Hundreds of creditor and collections increased collections, with one debts placed with the same debt industry commenters stated that commenter noting that a consumer’s collector, and that it is common for a reaching consumers by telephone is ability to pay will not increase debt collection agency to collect very difficult because most consumers regardless of how frequently the debt numerous separate accounts for the have several telephone numbers and are collector contacts the consumer. A State same consumer. A legal aid provider often unavailable to speak. They wrote Attorney General and a nonprofit noted that consumers seeking its that the proposed limit would make it commenter suggested that the number of assistance with debt collection issues harder to connect with consumers and telephone calls that would be permitted usually have more than one debt, which asserted that consumers would face under the proposed limit could result in multiplies the number of telephone calls various unintended consequences, consumers disengaging or being too they receive daily. The commenter including failure to reach workable stressed to answer the telephone, which asserted that this situation increases the repayment plans, additional interest and would frustrate, rather than facilitate, chance that any one debt collector will fees, negative credit reporting, and debt debt resolution. One commenter noted say or do something untruthful or collection litigation. Separately, many how the Bureau of the Fiscal Service of threatening, which in turn increases the accounts receivable management the U.S. Department of Treasury probability that consumers will act industry commenters stated that conducted a pilot program focused on hastily and not understand their rights. limiting communication would harm servicing defaulted student loans; the Commenters suggested a variety of consumers because consumers fare best program found that borrowers answered lower limits for permissible telephone when they know their full financial less than 2 percent of telephone calls, call frequency. A large number of situation and all available options. which the commenter argued shows the consumer commenters urged specific Industry commenters asserted that, ineffectiveness of repeated calls. An limits, such as two or three telephone based on their experience, the proposed FTC Commissioner commented that, call attempts per consumer, per limit would not have permitted enough with each successive telephone call week.401 Consumer advocate and telephone call attempts to establish after the first, the value decreases to the nonprofit commenters also contact with consumers. Some consumer because the consumer is less recommended the Bureau limit debt commenters argued that the Bureau likely to answer and receive collectors to three telephone call should not limit telephone call attempts information, yet the value increases to attempts per consumer, per week. Other because debt collectors must attempt to the debt collector because it causes suggestions included: Seven attempts contact multiple numbers at various undue stress to the alleged debtor; thus, per week, per type of debt (i.e., medical, times of the day in order to establish by the time a sixth or seventh call comes credit card); three cumulative attempts right party contact, while other in, harassing rather than informing across all communication media per commenters requested that the proposed seems to be the marginal utility. week, per consumer; and three attempts limit be increased for the same reasons. Consumer, legal aid provider, and per week, per debt. One nonprofit and One industry trade group commenter, consumer advocate commenters one local government commenter urged citing a 2016 survey of its members, asserted that the proposed seven the Bureau to follow the limits noted that certain debt categories have telephone call weekly frequency limit discussed in the Small Business Review an average of more than six telephone would increase telephone call volume Panel Outline.402 A local government numbers per account and that student from the status quo, particularly, as agency commenter noted the local loans have an average of four telephone some noted, for location information numbers per account. Another industry calls. Some commenters acknowledged 401 Over a thousand commenters supported a trade group commenter, representing that the proposal would appear to limit limit of one telephone conversation per week and debt collectors for student loans, among two telephone call attempts per consumer (not per or decrease telephone call volume for debt). Other commenters supported limiting other members, cited data from one of consumers with one debt but noted that telephone call attempts to three per week, per its members that it takes 20 attempts on telephone call volume would likely consumer, or to one telephone conversation and average to reach a consumer. A debt increase overall for consumers with three attempts per week, per consumer (not per collector commented that it typically multiple debts in collection. debt). receives one to two telephone numbers 402 The Small Business Review Panel Outline Relatedly, some commenters focused described a proposal under consideration that from the creditor from which its debts their criticism on how the proposed would have limited a debt collector’s weekly are purchased and three to five new seven telephone call weekly frequency contact attempts with consumers by any telephone numbers when trying to limit would not have covered the communication medium. The proposal under locate a consumer, meaning that it takes consideration would have specifically limited debt cumulative number of communications, collectors to three contact attempts per unique approximately 50 to 75 telephone calls particularly electronic communications, communication medium and six total contact to reach a single consumer. One and how the proposed limit was attempts before confirming consumer contact; and commenter explained that, because structured as a per-debt limit, not a per- to two contact attempts per unique communication consumers can always request that a medium and three total contact attempts after person limit. Some commenters confirming consumer contact. See Small Business debt collector stop calling, there is no expressed the view that allowing up to Review Panel Outline, supra note 36, at 25–26. need for a limit on weekly telephone

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76809

calls. A debt collector commenter communication between consumers and consumer within the following week suggested limiting only actual attorneys to resolve the matter quickly and expressed the belief that the communications and not attempts, before going to court. These commenters proposed limit would permit regular noting that debt collectors often have explained that a debtor may need to communication while also preventing multiple telephone numbers to work consult with someone else before harassment. An industry commenter through. agreeing to a repayment plan and may noted that, if there is a legitimate reason Industry stakeholders and other need additional telephone calls with the for another telephone call, proposed commenters expressed various concerns debt collector during the week. One § 1006.14(b)(3) provided for several about the proposed seven telephone call debt collector commenter suggested an reasonable exceptions. A consumer weekly frequency limit and stated it alternative frequency limit of 15 advocate commenter noted that the could have negative impacts on telephone call attempts per consumer, proposed limit was intuitive because it consumers. Some asserted that it would per debt, which the commenter wrote would permit a weekly reminder to be overly burdensome; explained that a was based on an internal data analysis. consumers who owe a debt, but different approach may be needed based An industry trade group pointed to nevertheless stated a belief that the limit on the type of consumer, debt, or specific circumstances necessitating would be problematic when coupled account status; and suggested the limit additional calls, such as resolving a with the proposed seven telephone call should account for smartphone dishonored check or correcting a weekly frequency limit. technology and call blocking rules that deficiency in loan consolidation or Many commenters, including a group have increased blocked calls from rehabilitation paperwork. Some of consumer advocates, supported the legitimate financial service providers. commenters also identified reverse proposed one telephone conversation Some commenters expressed concern mortgages and student loans as specific weekly frequency limit but expressed that the proposed limit would increase markets that would be negatively the view that imposing such a limit on debt collectors’ costs or more broadly affected by the proposed limit. a per-debt basis would be too have a negative impact on the economy, Several commenters challenged the permissive because it could result in especially for small businesses. Bureau’s exercise of FDCPA authority to harassment for consumers who have Commenters asserted that the limit impose the proposed telephone call multiple debts in collection.404 Some would lengthen the debt resolution frequency limits.403 Commenters commenters noted that the proposed process and provide fewer opportunities focused on what they believed was the one telephone conversation weekly to resolve debts in the manner best failure of the proposed telephone call frequency limit is particularly suited for the situation and, as a result, frequency limits to properly reflect the concerning in the context of medical increase interest, fees, and penalties for FDCPA section 806(5) ‘‘intent’’ debt and student loan debt, where there consumers. Commenters wrote that standard. Some noted that there are a are often several debts collected by the consumers would be unable to obtain number of reasons why debt collectors same debt collector. critical information about their accounts would make such telephone calls, most In contrast, a number of industry in collections, including when they ask of which are not intended to intimidate commenters expressed concern with the a debt collector to call them back at a or pressure the consumer. Another proposed one telephone conversation different, more convenient time or after commenter argued that Congress weekly frequency limit. They asserted they gather more information. considered and rejected telephone call that the proposed limit would Commenters also stated that consumers frequency limits when it passed the undermine the proposal’s purpose of would experience increases in litigation, FDCPA. assisting consumers in making better- credit reporting, and wage garnishment informed decisions about debts they Comments Regarding Proposed One and offsets. Commenters explained that owe or allegedly owe and would instead Telephone Conversation Weekly the proposed limit would negatively harm consumers by causing them to Frequency Limit affect access to credit and increase the miss information and opportunities to cost of credit for all consumers. They Many commenters, including avoid negative consequences. Several also argued that the proposed limit comments from approximately 500 industry commenters explained that, for would lead to an increase in letters, text credit unions, expressed support for the debt collectors, consistency in messages, and emails, even though some proposed one telephone conversation communications and good customer consumers may prefer telephone calls to weekly frequency limit. Some service is essential to providing the best other communication media. commenters stated agreement with the solutions. Others noted that, after Some industry commenters argued Bureau’s reasoning in the proposal that successful communication has been that the Bureau lacked data and other a debt collector who has been able to established with a consumer, limiting evidence to support the proposed seven engage in a telephone conversation with continued communication is not in the telephone call weekly frequency limit. a consumer about a debt generally has best interest of the consumer or the debt Some urged the Bureau to study more less reason to communicate with the collector. One industry trade group thoroughly the number of telephone call commenter cautioned that the proposed attempts that would be necessary to 403 Some industry commenters also criticized the one telephone conversation weekly ensure that effective communication is Bureau’s proposed use of unfairness authority frequency limit would result in higher under Dodd-Frank Act section 1031 to impose the not needlessly hindered. proposed telephone call frequency limits. As rates of delinquency, which in turn Some commenters requested that the discussed in the section-by-section analysis of would cause creditors to tighten Bureau impose different limits on § 1006.14(b), commenters raised several concerns telephone call frequency to address about how the proposal, if finalized, could be 404 Some commenters cited the CFPB Debt different circumstances. For example, applied to first-party debt collectors. A few Collection Consumer Survey as support for this commenters, moreover, challenged the Bureau’s argument, noting that the Consumer Survey found some commenters argued that the proposed identification of an unfair practice and that the majority of consumers who had been proposed telephone call frequency the necessity of imposing telephone call frequency contacted about repaying a debt in the prior year limits should not apply once litigation limits to prevent the identified unfair practice. As had been contacted about more than one debt, with or other civil action is initiated (or, as noted earlier, the Bureau is finalizing 57 percent contacted about two to four debts, and § 1006.14(b)(1) through (4) pursuant to its authority 15 percent contacted above five or more debts. the SBA urged, specifically while a under the FDCPA only and not section 1031(b) of Others cited the same fact without citing the settlement is being negotiated) to enable the Dodd-Frank Act. Consumer Survey.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76810 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

underwriting and lend less money weekly frequency limit. A group of framework and the rebuttal factors generally. Another commenter noted nonprofit commenters suggested a limit described in the commentary is that the proposed limit would lead to of one telephone call every two weeks, provided below. increased credit reporting and litigation. explaining that a biweekly limit would Rebuttable-presumption approach Commenters identified a number of decrease the overall frequency of generally; rationale for change from situations for which they believed more telephone calls directed toward proposed bright-line rule. The Bureau frequent communication would be consumers, while still allowing debt proposed § 1006.14(b)(2) to specify a particularly important. Industry trade collectors the opportunity to collect bright-line rule for telephone call group commenters cited the examples of payment based on a timeframe whereby frequencies that would have violated a consumer working out a debt the consumer is more likely to have the FDCPA section 806 and 806(5) and modification or forbearance and of debts funds to pay the debt. Other comments Regulation F, with narrow exceptions in involving motor vehicles if there is a suggesting alternative time periods are proposed § 1006.14(b)(3). As noted risk of repossession. Several industry described under the subheading earlier, FDCPA section 806 prohibits a commenters described the scenario of a Comments Regarding Proposed Seven broad range of debt collection consumer asking for more time to pay or Telephone Call Weekly Frequency Limit communication practices that harm promising to pay but the consumer did above. consumers and others, and section not follow through. Some commenters 806(5) in particular prohibits debt pointed to if consumers are at risk of The Final Rule collectors from making telephone calls foreclosure or engaged in loss The Bureau is not finalizing the mitigation. proposed telephone call frequency or engaging a person in telephone In the proposal, the Bureau sought limits, which would have imposed conversation repeatedly or continuously comment on the alternative of limiting bright-line rules regarding telephone with intent to annoy, abuse, or harass. only the total number of telephone calls calls. Rather, final § 1006.14(b)(2) FDCPA section 806(5) does not identify a debt collector could place about a debt includes telephone call frequencies as a specific number of telephone calls or during a defined time period, regardless part of a more flexible rebuttable- telephone conversations within any of whether the debt collector had presumption framework. particular timeframe that would violate engaged in a conversation with that Final § 1006.14(b)(2)(i) provides that, the statute. In the FTC Staff person about that debt during the subject to the exclusions in Commentary on the FDCPA, the FTC relevant period. At least one commenter § 1006.14(b)(3), a debt collector is noted, among other interpretations, that supported this alternative approach of presumed to comply with ‘‘ ‘[c]ontinuously’ means making a series limiting the total number of telephone § 1006.14(b)(1) and FDCPA section of telephone calls, one right after the calls, but not conversations, while 806(5) if the debt collector places a other’’ and ‘‘ ‘[r]epeatedly’ means calling another commenter supported the telephone call to a particular person in with excessive frequency under the inverse—limiting actual conversations, connection with the collection of a circumstances.’’ 406 Since the FDCPA but not the total number of telephone particular debt neither: (1) More than was enacted in 1977, courts interpreting calls. seven times within seven consecutive FDCPA section 806(5) have not A small number of commenters days; nor (2) within a period of seven developed a consensus or bright-line addressed how the proposal generally consecutive days after having had a test for telephone call frequency that would have counted a consumer- telephone conversation with the person would violate that provision. Moreover, initiated conversation as the debt in connection with the collection of while several States and localities have collector’s one permissible telephone such debt (with the date of the imposed numerical limits on debt call for the next seven consecutive days. telephone conversation being the first collection contacts, the limits vary, and A group of consumer advocates day of the seven-consecutive-day most jurisdictions have not established supported this aspect of the proposal, period).405 Section 1006.14(b)(2)(ii) any numerical limits.407 Technological asking the Bureau to specify that the provides that, subject to the exclusions developments also have intensified the proposed one telephone conversation in § 1006.14(b)(3), a debt collector is consumer-protection concerns weekly frequency limit applies presumed to violate § 1006.14(b)(1) and underlying FDCPA section 806(5), as regardless of whether the debt collector FDCPA section 806(5) if a debt collector described in the proposal.408 or consumer initiated the conversation. places a telephone call to a particular In light of these developments, On the other hand, an industry trade person in connection with the collection numerous problems with telephone call group requested that the Bureau exempt of a particular debt in excess of either frequency persist. As the proposal consumer-initiated calls from the of the telephone call frequencies described, frequent telephone calls are a proposed one telephone conversation described in § 1006.14(b)(2)(i). consistent source of consumer-initiated weekly frequency limit. See the section- Comments 14(b)(2)(i)–1 and 14(b)(2)(ii)– litigation and consumer complaints to by-section analysis of § 1006.14(b)(4) for 1 include examples illustrating when a Federal and State regulators, and more detail on how these comments are debt collector has a presumption of consumers’ lawsuits allege injuries such addressed. compliance or of a violation, as feeling harassed, stressed, Commenters also addressed the respectively. Comments 14(b)(2)(i)–2 intimidated, or threatened, and exclusions in proposed § 1006.14(b)(3) and 14(b)(2)(ii)–2 clarify how the sometimes allege adverse impacts on in the context of the proposed one presumptions can be rebutted and employment.409 In addition, from 2011 telephone conversation weekly include non-exhaustive lists of factors through 2018, the Bureau and the FTC frequency limit. The Bureau discusses that may rebut the respective received over 100,000 complaints about presumptions. More detail on the comments relating to the proposed repeated debt collection telephone exclusions in more detail in the section- operation of the rebuttable-presumption by-section analysis of § 1006.14(b)(3) 406 See 53 FR 50097, 50105 (Dec. 13, 1988). 405 A debt collector who places no telephone calls below. 407 during this time period would similarly be See 84 FR 23274, 23309 (May 21, 2019). Some commenters suggested 408 presumed to comply with the telephone call See id. at 23309–10 (describing the alternative time periods for the frequency limits under § 1006.14(b)(2)(i), and in fact development of the predictive dialer). proposed one telephone conversation would comply with them, for such time period. 409 See id. at 23310.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76811

calls.410 As described in the FDCPA harass.414 At the same time, debt electronic communication media.417 In 2020 Annual Report, during 2019, collectors have a legitimate interest in view of all these considerations, the consumers submitted complaints about reaching consumers because Bureau proposed to draw the line at communication tactics used when communicating with consumers is which a debt collector places telephone collecting debts, and the majority of central to their ability to recover calls repeatedly or continuously with complaints about communication tactics amounts owed to creditors, and too the intent to annoy, abuse, or harass any concerned communication over the greatly restricting debt collectors’ and person at the called number (and the telephone. Common categories of consumers’ ability to communicate with line at which such calls have the natural complaints about communication tactics one another could prevent debt consequence of harassing, oppressing, were frequent or repeated calls (55 collectors from establishing right-party or abusing any person) at seven percent) and continued contact attempts contact and resolving debts, even when telephone calls in a seven-day period despite requests to stop contact (29 doing so is in the interests of both about a particular debt. The proposal percent).411 consumers and debt collectors.415 The would have allowed debt collectors to Consumers’ experiences with, and Bureau also considered whether debt call up to seven times per week across complaints about, repeated or collectors’ reliance on making repeated multiple telephone numbers (e.g., a continuous debt collection telephone telephone calls to establish contact with home landline, mobile, work), and to calls do not necessarily establish that consumers could be reduced by other leave a limited-content message each the conduct in each instance would aspects of the proposal designed to time, and it would have not placed a have violated FDCPA section 806(5).412 address legal uncertainty regarding how specific numerical limit on how many But they do suggest, as described in the and when debt collectors may letters, emails, and text messages debt proposal, a widespread consumer communicate with consumers 416 and collectors could send. protection problem that has persisted regarding how debt collectors may use The Bureau similarly balanced a for 40 years notwithstanding the variety of policy considerations in FDCPA’s existing prohibitions and case- 414 See id. at 23311–12. The proposal described proposing the one telephone how in the Bureau’s Debt Collection Consumer conversation weekly frequency limit, as by-case enforcement by the FTC and the Survey, nearly 90 percent of respondents who said Bureau as well as private FDCPA they were contacted more than three times per week described in the proposal. The Bureau actions.413 To address this persistent indicated that they were contacted too often; 74 considered both the legitimate interests harm, the Bureau proposed percent of respondents who said they were of consumers and debt collectors in § 1006.14(b)(2) as described above. contacted one to three times per week indicated resolving debts and the potentially that that they were contacted too often; and 22 harmful effects on consumers of The proposed telephone call percent of respondents who said that they were frequency limits accounted for a number contacted less than once per week indicated that repeated or continuous telephone calls even this level of contact was too often. The Bureau after a telephone conversation. A debt of competing considerations, as notes, however, that a consumer reporting that a described in the proposal. On the one collector who already has engaged in a debt collector called too frequently does not telephone conversation with a consumer hand, even a small number of debt necessarily establish that the debt collector called collection calls may have the natural in violation of the FDCPA. about a debt may have less of a need to consequence of causing a consumer to 415 See id. at 23312. In the proposal, the Bureau place additional telephone calls to that described feedback from small entity experience harassment, oppression, or consumer about that debt within the representatives that consumers who do not next seven days than a debt collector abuse, and therefore, assuming the debt communicate with a debt collector may have collector is aware of this effect, the debt negative information furnished to consumer who has yet to reach a consumer. As a collector’s placement of even a small reporting agencies or may face additional fees or a result, a debt collector who has already collection lawsuit, which has financial or number of such calls to that consumer conversed with a consumer may be opportunity costs. The Bureau also noted that as more likely to intend to annoy, abuse, may indicate that the debt collector has much as some consumers might prefer to avoid the requisite intent to annoy, abuse, or speaking to debt collectors, many consumers benefit or harass the consumer by placing from communications that enable them to promptly additional telephone calls within one resolve a debt through partial or full payment or an week after a telephone conversation. At 410 See id. Citing the Bureau’s FDCPA Annual acknowledgement that the consumer does not owe the same time, a consumer who has Reports published from 2012 through 2019 and the some or all of the alleged debt. Bureau’s consumer complaint database generally, 416 Id. In the proposal, the Bureau described how, spoken by telephone to a debt collector the proposal described how some consumers for example, debt collectors who leave voicemails about a debt may be more likely than a describe being called multiple times per day, every for consumers currently face a dilemma about consumer who has not spoken by day of the week, for weeks or months at a time and whether to risk liability under FDCPA sections telephone to a debt collector about a how some consumers report that repeated calls 806(6) and 807(11) by omitting disclosures required make them feel upset, stressed, intimidated, under those sections, or to risk liability under debt to experience annoyance, abuse, or hounded, or weary, or that such calls interfere with FDCPA section 805(b) by including the disclosures harassment if the debt collector places their health or sleep or—when debt collection and potentially disclosing a debt to a third party additional, unwanted telephone calls to voicemails fill their inboxes—their ability to receive who might overhear the message. The Bureau other important messages. The proposal noted the consumer about that debt again proposed § 1006.2(j) to address that dilemma by 418 certain caveats about the counts of consumer defining a limited-content message that debt within the next seven days. complaints. See id. at 23310 n.287. collectors may leave for consumers without 411 2020 FDCPA Annual Report, supra note 9, at violating FDCPA sections 805(b), 806(6), or 807(11). 417 Id. The Bureau’s proposals in §§ 1006.6(d)(3) 15 (see Line 4 of Table 1). The Bureau wrote that permitting such messages and 1006.42 were designed to clarify that debt 412 For example, consumers may complain about should ensure that debt collectors can leave collectors may communicate electronically with telephone calls they do not want to receive, but this voicemails with a return call number for a consumers who prefer to communicate that way. does not necessarily mean that the debt collector consumer to use at the consumer’s convenience, Further, the Bureau did not propose to subject who placed the calls had the intent to annoy, which may help reduce the need for debt collectors email, text messages, or other electronic harass, or abuse necessary to establish a violation to place repeated telephone calls to contact communications to numerical frequency limits. See of FDCPA section 806(5), or that the telephone calls consumers. As described in more detail in the the discussion of electronic communications in the had the natural consequence of harassing, section-by-section analysis for § 1006.2(j), the section-by-section analysis of § 1006.14(a) and (b). oppressing, or abusing the consumer in violation of Bureau is finalizing § 1006.2(j) with a few changes 418 See 84 FR 23274, 23316–17 (May 21, 2019). FDCPA section 806. to the scope of the definition—limiting the The Bureau explained further that a consumer may 413 See 84 FR 23274, 23310 n.292 (May 21, 2019) definition of limited-content message to voicemail experience, and a debt collector may intend to (detailing examples of FTC complaints alleging messages that are not knowingly left with third cause, such annoyance, abuse, or harassment from FDCPA section 806(5) violations based on parties—as well as to the required and optional a second telephone conversation within one week frequency of telephone calls to consumers). content. Continued

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76812 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

In the proposal, the Bureau sought or abuse consumers and indicate the has decided that the proposal’s list of comment on a rebuttable-presumption debt collector’s intent to do so. One exclusions was insufficient. approach as an alternative to a bright- scenario commenters highlighted was The Bureau also recognizes the line rule where: (1) A debt collector who rapid succession calling, in which a arguments made by stakeholders about places telephone calls at or below the debt collector places a series of the weight of the evidence the Bureau frequency limits presumptively would telephone calls in rapid succession over used to justify the proposed telephone comply with § 1006.14(b)(1); (2) a debt the course of just a few minutes as a call frequency limits and the particular collector who exceeds the frequency potential way of harassing, annoying, or legal authorities on which the Bureau limits presumptively would violate abusing a consumer, even if the proposed to rely. Consumer advocates § 1006.14(b)(1); and (3) the cumulative number of telephone calls and other commenters challenging the presumptions could be rebutted based did not exceed the proposed seven proposed telephone call frequency on the facts and circumstances of a telephone call weekly frequency limit. limits cited, among other sources, particular situation. The Bureau Commenters also argued, for example, language in the proposal’s preamble, explained that it did not propose the that consumers could be harassed, Bureau and FTC consumer complaint rebuttable-presumption approach annoyed, or abused if a debt collector data, certain judicial decisions, and because the benefits of such an placed up to seven telephone calls over some State and local laws to argue for approach were unclear. The Bureau the course of a week even after the stricter limits. On the other hand, stated its preliminary view that most, if consumer had indicated the consumer industry commenters challenged the not all, of the circumstances that might did not want to be contacted again or Bureau’s basis for setting the limits in require a debt collector to exceed the did not owe the debt in question.420 The the proposal by citing different case law, proposed telephone call frequency consistent theme in these comments internal data analyses in some cases, limits could be addressed by specific was that the proposed telephone call and other sources. Moreover, as exceptions to a bright-line rule; and the frequency limits still left room for discussed above, under the proposal the Bureau wrote that a well-defined, consumers to be annoyed, harassed, or Bureau would have interpreted the bright-line rule with specific exceptions abused depending on the circumstances FDCPA to set bright-line limits at the could provide needed flexibility of the telephone calls. specified levels; the Bureau also without sacrificing the clarity of a At the same time, debt collectors, proposed that such limits were bright-line rule. The Bureau noted that necessary to prevent an identified unfair a bright-line rule may also promote industry trade groups, and other industry commenters provided a variety practice under section 1031 of the predictability and reduce the risk and Dodd-Frank Act, premises which were 419 of arguments for why a bright-line rule uncertainty of litigation. challenged by some stakeholders. The comments from thousands of for telephone call frequencies would be As discussed above, there are stakeholders, evidencing a range of potentially detrimental to consumers competing considerations inherent in viewpoints on the issue of telephone and unworkable from an operational crafting a workable telephone call call frequency limits, reflect the perspective. They asserted that various frequency standard that adequately inherent challenges in trying to craft a types of telephone calls warranted a protects consumers. During this rule for telephone call frequencies that more permissive approach, such as rulemaking process, telephone call appropriately balances consumer telephone calls required by applicable frequency limits generated strong protection with the interests of debt law (e.g., to alert the consumer of loss- reaction from stakeholders who possess collectors and consumers in efficient mitigation options) or placed as part of different and reasonably held views on operation of the debt collection process. active litigation. Others argued that the what the limits should be, or whether The Bureau proposed to draw a bright rule should permit debt collectors to there even should be limits at all. And line, reasoning that the certainty and place telephone calls that would enable as noted above, case law is unsettled on predictability of telephone call the consumer to avoid imminent, the question of how FDCPA section frequency limits outweighed the demonstrable negative consequences, 806(5) draws the line at permissible benefits of a more flexible approach, such as an impending foreclosure or telephone call frequency,422 which is such as a rebuttable-presumption rule. automobile repossession. Having considered these comments, the Bureau After considering the robust comments 422 See, e.g., Rigby v. Crosscheck Servs., LLC, No. on the proposal, the Bureau now has has decided that the proposed bright- 19–cv–36–jdp, 2020 WL 1492893, at *5–6 (W.D. decided to adopt a different approach. line rule may not have adequately Wis. Mar. 27, 2020) (concluding that it was a As described earlier, consumer accounted for situations in which the genuine issue of fact whether a debt collector advocates, State Attorneys General, legal intended to annoy, abuse, or harass the consumer purpose, context, and effect of certain by placing a total of 76 telephone calls over a period aid providers, consumers, and various telephone calls may reflect not an intent of four-and-a-half months, sometimes repeatedly other stakeholders strongly opposed the to harass, annoy, or abuse the consumer, within the span of a few minutes, and when the proposed telephone call frequency but rather an intent to help the debt collector was asked to pause or stop the calls limits, arguing that the proposed bright- on three occasions); Bruner v. AllianceOne consumer avoid a negative outcome or Receivables Mgmt., Inc., No. 15 C 9726, 2017 WL line rule would insufficiently protect an intent to comply with law. Although 770993, at *2–3 (N.D. Ill. Feb. 28, 2017) (finding consumers. They cited various scenarios the Bureau did propose a handful of that 11 telephone calls made over six weeks in which seven or fewer telephone calls exclusions from the telephone call ‘‘plausibly indicates intent to harass or annoy’’ within a week could still annoy, harass, 421 under the circumstances). But see, e.g., Martin v. frequency limits, the Bureau Allied Interstate, LLC, 192 F. Supp. 3d 1296, 1307 recognizes that it is difficult to (S.D. Fla. 2016) (finding that 19 telephone calls over even if the consumer, rather than the debt collector, anticipate all scenarios that would merit a month, the majority unanswered, without more— initiated the first telephone conversation. Therefore, exclusion or more lenient treatment and e.g., where derogatory language was used during the under the proposal, if a consumer initiated a call—is not sufficient to sustain a claim of telephone conversation with the debt collector, that harassment under FDCPA section section 806(5)); telephone conversation generally would have 420 This scenario would be a violation of the Carman v. CBE Grp., Inc., 782 F. Supp. 2d 1223, counted as the debt collector’s one permissible cease-communication provision in final 1229, 1232 (D. Kan. 2011) (granting summary telephone conversation for the next week, subject § 1006.6(c)(1). judgment on FDCPA section 806(5) claim in debt to certain exclusions in proposed § 1006.14(b)(3). 421 See the section-by-section analysis of collector’s favor even though the debt collector 419 See id. at 23311, 23319–20. § 1006.14(b)(3). called the debtor 149 times during two months,

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76813

reinforced by the fact that commenters applying FDCPA section 806(5). More Relatedly, the Bureau declines to cited different opinions to buttress their broadly, the Bureau is now persuaded change the specific levels for the respective positions on the proposed that the additional flexibility afforded telephone call frequency in limits.423 by the rebuttable-presumption approach § 1006.14(b)(2) in response to certain The Bureau has reconsidered the outweighs the enhanced certainty and commenters’ suggestions to set lower or bright-line rule approach and has clarity that would have been provided higher limits. As noted above, a decided to finalize instead a rebuttable- by the proposed bright-line rule. The common suggestion by commenters presumption approach to telephone call final rule also contains certain enhanced urging stricter limits was three frequency. The rebuttable-presumption consumer protections. For example, the telephone call attempts per week, per framework provides additional proposed bright-line rule would not consumer. Conversely, industry flexibility, as well as enhanced have addressed circumstances in which commenters urged the Bureau to adopt consumer protections in certain debt collectors engage in rapid more permissive limits, such as 15 respects. The telephone call frequencies succession calling while still complying telephone calls per week, per debt. The remain as proposed—i.e., seven with the proposed seven telephone call Bureau has determined that the specific telephone calls and one conversation weekly frequency limit. This final rule levels proposed as telephone call per week, per debt—but, under the final addresses this conduct.424 frequency limits—seven telephone calls rule, the debt collector is only presumed Notwithstanding the final rule’s shift and one conversation, per debt, in each to comply with or violate § 1006.14(b)(1) to a rebuttable-presumption approach, seven-consecutive-day period—are and FDCPA section 806(5) based on the Bureau is retaining the specific reasonable policy judgments in view of those frequency levels. As discussed numeric frequency limits that it the existing evidence and the competing below, the commentary being adopted proposed. The Bureau determines as a considerations discussed above (and in in the final rule clarifies the operation general matter that the FDCPA case law, the proposal), within a rebuttable- of the rebuttable presumption and the high volume of consumer presumption framework. The final rule includes lists of non-exhaustive factors complaints in this area, the evidence allows rebuttal of the presumption of that stakeholders may use to rebut the described in the Bureau’s FDCPA compliance or of a violation, presumptions, along with examples. Reports, technological developments, respectively, even if the debt collector The Bureau has determined that the and other policy considerations places telephone calls at or below, or in rebuttable-presumption framework described in this section-by-section excess of, the telephone call frequency better balances the competing analysis and in the proposal support a levels. Consequently, the rebuttable- considerations regarding telephone call regulatory intervention that clarifies the presumption framework addresses many frequency. As the Bureau noted in the limits on telephone call frequency. In of the policy concerns animating the proposal, a rebuttable-presumption addition, as discussed in the proposal, requests for higher or lower limits under approach does not provide the same when Congress conferred FDCPA a bright-line rule.426 level of predictability or litigation-risk rulemaking authority on the Bureau reduction as a bright-line rule. But the through the Dodd-Frank Act in 2010, it The Bureau recognizes that many final rule does provide greater certainty relied, in part, on consumers’ commenters—particularly consumer than the status quo. The Bureau is experiences with repeated or advocates, State Attorneys General, and adopting a standard that anchors the continuous debt collection telephone consumers—criticized the proposal for telephone call frequency limits at calls to observe that case-by-case imposing limits on a per-debt, rather specified levels—seven telephone calls enforcement of the FDCPA had not than per-person, basis. The per-debt per week, per debt, and one ended the consumer harms that the approach is unchanged in the final rule. conversation per week, per debt—while statute was designed to address.425 The section-by-section analysis of permitting variances from those § 1006.14(b)(4) discusses the Bureau’s frequency levels when stakeholders can 424 The final rule contains a presumption of reasoning for finalizing the per-debt prove that specific factual compliance under final § 1006.14(b)(2)(i) which the approach as proposed. circumstances merit them. Moreover, commentary clarifies may be rebutted where there is evidence of rapid succession calling. See the detailed commentary being adopted comment 14(b)(2)(i)–2.i. The Bureau notes that, in with continuous calls’’ to conclude that abusive in the final rule clarifying the operation addition to commenters raising concerns about debt collection practices had continued to of the rebuttable presumption and rapid succession calling, various judicial decisions proliferate since the FDCPA’s passage. S. Rep. No. including examples will inform judicial have recognized this practice as a potential basis for 111–176, at 19 (2010). In connection with that an FDCPA section 806(5) violation. See, e.g., Neu finding, among others, Congress granted the Bureau analysis of line-drawing questions in v. Genpact Servs., LLC, No. 11–CV–2246 W(KSC), the authority to prescribe rules with respect to the 2013 WL 1773822, at *4–5 (S.D. Cal. Apr. 25, 2013) activities of FDCPA debt collectors. 15 U.S.C. 1692l. because there was ‘‘no evidence of an unacceptable (holding that 150 telephone calls in 51 days raised The Bureau also cites these Dodd-Frank Act pattern of calls’’). a triable issue of fact as to the debt collector’s intent legislative history and FDCPA provisions in 423 One Federal district court opinion cited by a to harass and observing that ‘‘[a] reasonable trier of response to commenters who argued that the group of consumer advocates urging the Bureau to fact could find that [calling the consumer six times FDCPA legislative history does not support the impose stricter telephone call frequency limits in one day] alone, apart from the sheer volume of imposition of the telephone call frequency limits illustrates this point. The court allowed an FDCPA calls placed by [the debt collector], is sufficient to proposed by the Bureau. section 806(5) claim to proceed based on a find that [the debt collector] had the ‘intent to 426 Although the Bureau’s adoption of a consumer’s receipt of 15 telephone calls over a annoy, abuse or harass’’’); Arteaga v. Asset rebuttable-presumption framework using the same three-week period. See Ambroise v. Am. Credit Acceptance, LLC, 733 F. Supp. 2d 1218, 1228 (E.D. proposed frequency levels could, as some Adjusters, LLC, No. 15–22444–CIV–ALTONAGA/ Cal. 2010) (‘‘Calling a debtor numerous times in the commenters asserted, lead to an increase in letters, O’Sullivan, 2016 WL 6080454, at *3 (S.D. Fla. Mar. same day, or multiple times in a short period of text messages, and emails for consumers who may 22, 2016). The court, however, noted that while the time, can constitute harassment under the have preferred telephone calls, the general telephone call frequency ‘‘weighs in favor of FDCPA.’’). prohibition against harassing, oppressive, or granting the maximum statutory damages,’’ it could 425 See 84 FR 23274, 23310 (May 21, 2019). The abusive conduct in § 1006.14(a) and FDCPA section not conclude ‘‘the violations were intentional or proposal described how in a 2010 report prepared 806 would protect consumers from undue increases particularly egregious,’’ pointing to (among other in connection with the Restoring American in debt collectors’ use of such communication things) how the debt collector did not make any Financial Stability Act of 2010 (the Senate’s media, and the Bureau has clarified in newly additional telephone calls after the consumer told predecessor bill to the Dodd-Frank Act), the Senate adopted commentary to § 1006.14(a) that the the debt collector to stop calling. For this reason, Committee on Banking, Housing, and Urban Affairs general prohibition addresses communications and the court declined to allow recovery of the statutory cited consumer complaints to the FTC about, among attempted communications involving other types of maximum for damages. Id. other things, debt collectors ‘‘bombarding [them] media. See comments 14(a)–1 and –2.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76814 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

The Bureau also is not finalizing any rebutted and includes a non-exhaustive Comment 14(b)(2)(i)–2 also clarifies of the variations of the rebuttable- list of factors that may rebut the that the non-exhaustive list of factors in presumption approach on which the presumption of compliance. The comments 14(b)(2)(i)–2.i through .iv Bureau sought comment in the proposal, comment first clarifies that, to rebut a may be considered either individually such as finalizing only a presumption of presumption of compliance, it must be or in combination with one another or compliance or violation (but not both), proven that a debt collector who did not with other, non-specified factors. The or finalizing a safe harbor for telephone place a telephone call in excess of either comment further clarifies that the calls below the specified frequency of the telephone call frequencies factors may be viewed in light of any paired with a presumption of a violation described in § 1006.14(b)(2)(i) other relevant facts and circumstances for telephone calls above the specified nevertheless placed a telephone call or and therefore may apply to varying frequency (or the opposite). The Bureau engaged a person in telephone degrees. The Bureau notes that the believes these variations would add conversation repeatedly or continuously factors included in comments needless complexity to the framework with intent to annoy, abuse, or harass 14(b)(2)(i)–2.i through .iv are generally without clear benefits, in comparison to any person at the called number. This aligned with circumstances cited by the rebuttable-presumption approach language in the comment generally courts as relevant to the determination adopted in the final rule. Further, any tracks the language of FDCPA section of whether FDCPA section 806(5) has variation that includes a per se rule as 806(5). Comment 14(b)(2)(i)–2 also been violated.432 an element of the framework would explains that, for purposes of Comment 14(b)(2)(i)–2.i clarifies that suffer from the same disadvantages as determining whether the presumption the frequency and pattern of telephone commenters identified with the of compliance has been rebutted, it is calls the debt collector places to a proposed bright-line rule. assumed that debt collectors intend the person, including the intervals between natural consequence of their actions. them, is a factor that may rebut the Rebuttable Presumption of Compliance The Bureau has included this language presumption of compliance. The As noted above, § 1006.14(b)(2)(i) to clarify how the rebuttable comment further clarifies the provides for a rebuttable presumption of presumption relates to the ‘‘natural considerations relevant to this factor compliance. Under § 1006.14(b)(2)(i), consequence’’ language in FDCPA include whether the debt collector subject to the exclusions in section 806 and the intent requirement placed telephone calls to a person in § 1006.14(b)(3), a debt collector is in FDCPA section 806(5). The Bureau rapid succession (e.g., two unanswered presumed to comply with notes that some commenters criticized telephone calls to the same telephone § 1006.14(b)(1) and FDCPA section the proposed telephone call frequency number within five minutes) or in a 806(5) if the debt collector places a limits as not incorporating the FDCPA telephone call to a particular person in natural consequence of harassing, oppressing, or section 806(5) intent requirement. In the abusing the consumer. However, the Bureau connection with the collection of a proposal, the Bureau cited judicial declines to specify a more particularized intent particular debt neither: (1) More than decisions to support the interpretation standard under § 1006.14(b)(2), such as ‘‘know or seven times within seven consecutive that debt collectors generally intend the have reason to know’’ because the Bureau believes days; nor (2) within a period of seven 428 doing so would entail significant legal and practical natural consequence of their actions. complexity. The Bureau also has concern that consecutive days after having had a The Bureau finds the two opinions cited imposing a more particularized intent standard telephone conversation with the person in the proposal persuasive because one could lead to evasion if debt collectors could then in connection with the collection of logically harmonizes the ‘‘natural try to disclaim an intent to harass, annoy, or abuse such debt. The date of the telephone the consumer after the fact by attesting to their lack consequence’’ language in FDCPA of intent. conversation is the first day of the section 806 with the intent requirement 432 See, e.g., Davis v. Diversified Consultants, Inc., seven-consecutive-day period. in FDCPA section 806(5),429 while the 36 F. Supp. 3d 217, 228 (D. Mass. 2014) (‘‘[T]here The final rule includes new other recognizes ‘‘perhaps the oldest are no bright-line rules as to what constitutes commentary to clarify various aspects of harassment or what demonstrates intent to annoy. rule of evidence’’ applied across areas of Instead, such findings have been based on a the telephone call frequency provisions law—that a person ‘‘is presumed to consideration of multiple factors. For example, in and the rebuttable-presumption intend the natural and probable determining whether the intent requirement is met, framework.427 Comment 14(b)(2)(i)–1 consequences of [that person’s] acts.’’ 430 courts often look to the volume, frequency, and describes the rebuttable presumption of persistence of calls, to whether defendant Accordingly, the Bureau has continued to call after plaintiff requested it cease, compliance and emphasizes that, to incorporated this concept in comment and to whether plaintiff actually owed the alleged have the presumption of compliance, 14(b)(2)(i)–2.431 debt.’’); Valle v. Nat’l Recovery Agency, No. 8:10– the debt collector’s telephone call cv–2775–T–23MAP, 2012 WL 1831156, at *1 (M.D. Fla. May 18, 2012) (‘‘Factors often examined in frequencies must not exceed the limits 428 See 84 FR 23274, 23312 n.304 (May 21, 2019) assessing a claimed violation of Section 1692d and set in either prong of § 1006.14(b)(2)(i). (citing Litt v. Portfolio Recovery Assocs. LLC, 146 Section 1692d(5) include (1) the volume and The comment also includes three F. Supp. 3d 857, 873 (E.D. Mich. 2015); United frequency of attempts to contact the debtor, (2) the examples illustrating the application of States v. Falstaff Brewing Corp., 410 U.S. 526, 570 volume and frequency of contacts with the debtor, n.22 (1973) (Marshall, J., concurring in result)). (3) the duration of the debt collector’s attempted the rule and the circumstances in which 429 See Litt, 146 F. Supp. 3d at 873 (‘‘[W]hile the communication and collection, (4) the debt the debt collector would be presumed to general proscription of § 1692d does not use the collector’s use of abusive language, (5) the medium comply with § 1006.14(b)(1) and FDCPA word ‘intent,’ such a requirement is inferred from of the debt collector’s communication, (6) the section 806(5). the necessity to establish that the natural tendency debtor’s disputing the debt or the amount due, (7) Comment 14(b)(2)(i)–2 clarifies how of the conduct is to embarrass, upset or frighten a the debtor’s demanding a cessation of the debtor. If the natural tendency of certain conduct communication, (8) the debt collector’s leaving a the presumption of compliance can be is to embarrass, upset or frighten, then one who message, (9) the debt collector’s calling at an engages in such conduct can be presumed to have unreasonable hour, (10) the debt collector’s calling 427 While the final rule retains aspects of the intended the natural consequences of his acts.’’). the debtor at work, (11) the debt collector’s proposed commentary for § 1006.14(b)(2), including 430 Falstaff, 410 U.S. at 570 n.22 (Marshall, J., threatening the debtor, (12) the debt collector’s some similar examples, the commentary has been concurring in result). lying to the debtor, (13) the debt collector’s revised to such a degree in light of the rebuttable- 431 In the proposal, the Bureau posited that the impersonating an attorney or a public official, (14) presumption approach that this section-by-section alternative rebuttable-presumption approach could the debt collector’s contacting a friend, co-worker, analysis does not describe particular differences allow a consumer to show that the debt collector employee, employer, or family member, and (15) from the proposed language and instead just focuses knew or should have known that the proposed the debt collector’s simulating or threatening legal on the final content. telephone call frequency limits would have the process.’’).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76815

highly concentrated manner (e.g., seven the debt collector, for example, that the believes that, if a debt collector telephone calls to the same telephone person did not wish to be contacted previously used obscene language or number within one day). Comment again about the particular debt, that the threatened violence during a debt 14(b)(2)(i)–2.i then provides an example person refused to pay the particular collection telephone call, or called at an illustrating application of this factor. debt, or that the person did not owe the inconvenient place or time, and thereby The Bureau has included this factor particular debt. The comment clarifies violated another rule provision (and the because many commenters raised the that this factor also includes a FDCPA itself), then the person receiving pattern and frequency of telephone calls consumer’s cease communication the subsequent telephone calls may be as relevant to determining intent under notification described in § 1006.6(c) and more likely to find they are annoying, FDCPA section 806(5), and courts have a consumer’s request under § 1006.14(h) harassing, or abusive. The Bureau also often cited this factor as well, as that the debt collector not use telephone believes that by placing the subsequent described above. The Bureau believes calls to communicate or attempt to telephone calls, it generally would be that the frequency and pattern of the communicate with the consumer. The more likely that the debt collector telephone calls, including the intervals comment also clarifies that the amount intended to annoy, harass, or abuse the between them, are indicative of both the of time elapsed since any such prior person. intent of the debt collector and the communications may be relevant to this Comment 14(b)(2)(i)–3, which is natural consequence on the person factor. The Bureau has included this substantively unchanged from proposed called. The Bureau has also included factor based on concerns raised by comment 14(b)(2)–2, addresses specific language in the comment to commenters that a debt collector could misdirected telephone calls. The address concerns raised by commenters annoy, harass, or abuse consumers by comment explains that, for purposes of about debt collectors engaging in rapid continuing to place telephone calls even the telephone call frequencies in succession calling or placing telephone after the person informed the debt § 1006.14(b)(2)(i), if within a period of calls in a concentrated matter on days collector about the person’s desire not to seven consecutive days, a debt collector that may be less convenient for some be contacted again about the particular attempts to communicate with a consumers (such as Sundays or debt or that the consumer does not owe particular person by placing telephone holidays).433 Application of this factor or refuses to pay the particular debt. calls to a particular telephone number, is not limited to rapid succession or Although the number of additional and the debt collector then learns that highly concentrated calling, however, telephone calls at issue would not the telephone number is not that and is dependent on all of the relevant exceed the telephone call frequencies, person’s number, the telephone calls facts and circumstances that may in view of the prior conversation, that the debt collector made to that indicate an intent on the part of the debt especially a recent prior conversation, number are not considered to have been collector to harass, annoy, or abuse the the person may be more likely to find telephone calls placed to that person consumer. the additional telephone calls annoying, during that seven-day period for Comment 14(b)(2)(i)–2.ii clarifies that harassing, or abusive. Moreover, the purposes of § 1006.14(b)(2)(i). The the frequency and pattern of any Bureau believes that in this comment also provides an example voicemails the debt collector leaves for circumstance it generally would be illustrating application of the rule. As a person, including the intervals more likely that the debt collector the Bureau wrote in the proposal, a between them, is another factor that intended to annoy, harass, or abuse the person is unlikely to be harassed by debt collection calls that are placed to may rebut the presumption of person.434 a telephone number that belongs to compliance. The comment notes that Comment 14(b)(2)(i)–2.iv clarifies that someone else.435 the considerations relevant to this factor a factor that may be used to rebut the include whether the debt collector left presumption of compliance is the debt Rebuttable Presumption of a Violation voicemails for a person in rapid collector’s conduct in prior As noted above, § 1006.14(b)(2)(ii) succession (e.g., two voicemails within communications or attempts to provides that a debt collector is five minutes left at the same telephone communicate with the person. The presumed to violate § 1006.14(b)(1) and number) or in a highly concentrated comment explains that among the FDCPA section 806(5) if the debt manner (e.g., seven voicemails left at the considerations relevant to this factor are collector places a telephone call to a same telephone number within one whether, during a prior communication particular person in connection with the day). The Bureau included this factor or attempt to communicate with a collection of a particular debt in excess for similar reasons to those underlying person, the debt collector, for example, of either of the telephone call inclusion of the factor in comment used obscene, profane, or otherwise frequencies described in 14(b)(2)(i)–2.i. abusive language (see § 1006.14(d)), Comment 14(b)(2)(i)–2.iii clarifies that used or threatened to use violence or 435 A small number of comments discussed another factor that may rebut the other criminal means to harm the whether the Bureau should provide additional presumption of compliance is the person (see § 1006.14(c)), or called at an clarification about how a debt collector determines content of a person’s prior that a telephone number is not associated with a unusual or inconvenient time or place particular person. A compliance consulting firm communications with the debt collector. (see § 1006.6(b)(1)). The comment also commented that the Bureau should let company The comment explains that among the clarifies that the amount of time elapsed policy dictate the determination, while another considerations relevant to this factor are since any such prior communications or commenter believed that the Bureau should give whether the person previously informed additional clarification. Consumer advocate attempts to communicate may be commenters urged the Bureau to require debt relevant to this factor. The Bureau has collectors to check the telephone number against 433 Courts evaluating FDCPA section 806(5) included this factor for similar reasons the FCC’s Reassigned Number Database or one of claims sometimes have focused on rapid succession as comment 14(b)(2)(i)–2.iii. The Bureau the commercial databases that is already available calling as well, as noted in some of the cases cited to see if it has been reassigned since the debt earlier in this section-by-section analysis. The FTC collector last verified that it belonged to the Staff Commentary on the FDCPA, while not binding 434 The Bureau notes the comment it received consumer. The Bureau declines to mandate any on the Bureau, also provides support for from a credit union pointing out that the nature and particular method by which a debt collector must interpreting FDCPA section 806(5) to prohibit rapid content of a conversation may be instructive as to learn that the telephone number is not associated succession calling under the ‘‘continuously’’ prong. whether successive calls may harass, annoy, or with a particular person within the meaning of the See 53 FR 50097, 50105 (Dec. 13, 1988). abuse consumers. comment.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76816 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

§ 1006.14(b)(2)(i). The telephone call debt collector placed a telephone call to Comment 14(b)(2)(ii)–2.iii clarifies frequencies are subject to the exclusions comply with, or as required by, that another factor that may rebut the in § 1006.14(b)(3). Comment applicable law. The comment provides presumption of a violation is whether a 14(b)(2)(ii)–1 provides two examples an example in which a debt collector debt collector placed a telephone call in illustrating the rule. placed one telephone call above the response to a consumer’s request for Comment 14(b)(2)(ii)–2 clarifies how applicable telephone call frequency additional information when the the presumption of a violation can be limit to inform the consumer of exclusion in § 1006.14(b)(3)(i) for rebutted and includes a non-exhaustive available loss mitigation options in telephone calls made with the list of factors that may rebut the compliance with the Bureau’s mortgage consumer’s prior consent given directly presumption of a violation. The servicing rules under Regulation X, 12 to the debt collector did not apply. The comment clarifies that, to rebut the CFR 1024.39(a). The comment clarifies comment includes an example in presumption of a violation, it must be that the debt collector’s compliance which, during a telephone conversation, proven that a debt collector who placed with applicable law is a factor that may the consumer tells the debt collector a telephone call in excess of either of rebut the presumption of a violation. that the consumer would like more the frequencies described in The Bureau includes this factor because information about the amount of the § 1006.14(b)(2)(i) nevertheless did not telephone calls placed to comply with debt but that the consumer cannot talk place a telephone call or engage any or as required by applicable law at that moment, and the consumer ends person in telephone conversation generally would not reflect an intent on the telephone call before the debt repeatedly or continuously with intent the part of the debt collector to harass, collector can seek prior consent under to annoy, abuse, or harass any person at annoy, or abuse a consumer. Numerous § 1006.14(b)(3)(i) to call back with the the called number. The comment commenters cited compliance with requested information.440 The fact that clarifies that, for purposes of applicable law as a basis for excluding the debt collector placed the additional determining whether a presumption of a a telephone call from the proposed call in response to the consumer’s violation has been rebutted, it is bright-line telephone call frequency request is a factor that may rebut the assumed that debt collectors intend the limits pursuant to § 1006.14(b)(3). The presumption of a violation. The Bureau natural consequence of their actions. Bureau is not excluding this category of has included this factor based on The comment notes that comments telephone calls from the frequency consideration of circumstances in which 14(b)(2)(ii)–2.i through .iv provide a limits entirely, however, because, as the debt collector places a telephone non-exhaustive list of factors that may stated in the proposal, the Bureau call in response to the consumer’s 436 rebut the presumption of a violation. understands that legally required request, and thus may be placing the The comment explains that the factors communications infrequently are call without intent to harass, annoy, or may be considered either individually delivered over the telephone, in contrast abuse the consumer, but where the or in combination with one another or to by mail or other means. exclusion under § 1006.14(b)(3)(i) does other non-specified factors.437 The Comment 14(b)(2)(ii)–2.ii describes not apply because the debt collector has comment also clarifies that the factors that another factor that may rebut the not obtained the consumer’s consent. may be viewed in light of any other presumption of a violation is whether a Comment 14(b)(2)(ii)–2.iv clarifies relevant facts and circumstances and debt collector placed a telephone call that a factor that may rebut the therefore may apply to varying 438 that was directly related to active presumption of a violation is whether a degrees. debt collector placed a telephone call to Comment 14(b)(2)(ii)–2.i clarifies that litigation involving the collection of a convey information to the consumer one factor that may rebut the particular debt. The comment provides that, as shown through evidence, would presumption of a violation is whether a an example in which an additional telephone call beyond the applicable provide the consumer with an 436 While the Bureau believes that telephone calls telephone call frequency was placed to opportunity to avoid a demonstrably placed under these four circumstances generally complete a court-ordered negative effect relating to the collection would not reflect an intent on the part of the debt communication with the consumer of the particular debt, where the collector to harass, annoy, or abuse the consumer, about the debt, or as part of negotiations negative effect was not in the debt it is possible that there could be factual circumstances where such a telephone call is placed to settle active debt collection litigation collector’s control, and where time was with that intent. Therefore, the Bureau is including regarding the debt. The comment of the essence.441 Comment 14(b)(2)(ii)– such telephone calls within the rebuttable explains that the direct relationship 2.iv.A provides the following example: presumption rather than excluding them from the between the additional telephone call A debt collector and consumer engage telephone call frequencies altogether under final § 1006.14(b)(3). and the active debt collection litigation in a lengthy conversation regarding 437 As suggested by commenters, there may be is a factor that may rebut the settlement terms; the call drops toward other circumstances where it may be proven that a presumption of a violation.439 The the end of the conversation; and the debt collector who placed telephone calls in excess Bureau has included this factor because debt collector immediately places an of either of the telephone call frequencies described in § 1006.14(b)(2)(i) nevertheless did not place a these types of telephone calls may additional telephone call to complete telephone call or engage any person in telephone enable communication between conversation repeatedly or continuously with intent consumers and debt collectors to resolve 440 This factor addresses concerns raised by some to annoy, abuse, or harass any person at the called a debt collection matter during litigation commenters that the proposed seven telephone call number. Because the list of factors identified in weekly frequency limit would harm consumers by comments 14(b)(2)(ii)–2.i through .iv is not and, depending on the facts and preventing a debt collector from calling a consumer exhaustive, other factors may be considered, if circumstances, may not reflect an intent back, at the consumer’s request, at a different, more warranted by the relevant facts and circumstances. on the part of the debt collector to convenient, time or after they gather more 438 The language in comment 14(b)(2)(ii)–2, harass, annoy, or abuse the consumer. information; and ultimately lead to increases in including how debt collectors are assumed to litigation, negative credit reporting, and wage intend the natural consequence of their actions and garnishment and offsets. how the factors may apply to varying degrees, 439 Commenters, including the SBA, suggested 441 This factor addresses concerns raised by some parallels the language in comment 14(b)(2)(i)–2 that the proposed telephone call frequency limits commenters that the proposed seven telephone call describing the rebuttable presumption of should not apply once litigation or other civil weekly frequency limit would provide fewer compliance. This reflects how operation of the two action is initiated (or specifically while a settlement opportunities to resolve debts in manner best suited presumptions under the rule—but not the factors is being negotiated). This factor responds to the for the situation, and as a result, would increase themselves—is intended to be the same. commenters’ suggestion. interest, fees, and penalties for consumers.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76817

the conversation. As explained in the patterns that they believed called for Proposed Provision Not Finalized comment, the fact that the debt collector exclusions because the consumer would Proposed § 1006.14(b)(3)(i) would placed the telephone call to permit the avoid harm or potentially would benefit have excluded from the frequency limits debt collector and the consumer to from the communication. However, the telephone calls that a debt collector complete the conversation about Bureau declines to include categorical places to a person to respond to a settlement terms, which provides the exclusions for these types of telephone request for information from that consumer an opportunity to avoid a calls. Because the rebuttal factors are person.444 Proposed comment demonstrably negative effect that was non-exhaustive, the Bureau need not 14(b)(3)(i)–1 would have clarified that, not in the debt collector’s control (i.e., address each scenario raised by once a debt collector responds to a having to repeat a substantive commenters; the question of whether person’s request for information, the conversation with a potentially different the presumption can be rebutted in a exception in proposed § 1006.14(b)(3)(i) representative of the debt collector) and given case ultimately depends on the would not apply to subsequent where time was of the essence (i.e., to circumstances. Furthermore, the Bureau telephone calls placed by the debt prevent the delay of settlement has included language and structured collector to the person, unless the negotiations by seven days), is a factor person makes another request for that may rebut the presumption of a the examples in this comment to emphasize the factor’s limitations: That information. Proposed comment violation. 14(b)(3)(i)–2 provided an example of the Comment 14(b)(2)(ii)–2.iv.B provides evidence must show that the additional telephone call provided the consumer rule. an example in which: A consumer Industry commenters requested with an opportunity to avoid a previously entered into a payment plan clarification on a variety of issues demonstrably negative effect; that the with the debt collector regarding a debt; related to the proposed § 1006.14(b)(3)(i) the conditions for the payment plan negative effect was not in the debt exclusion. For example, commenters were set by the creditor; among those collector’s control; and that time was of asked the Bureau to define ‘‘request for conditions is that only the creditor, in the essence. The Bureau concludes that information’’; questioned whether its sole discretion, may approve waivers cabining the factor in this manner is certain scenarios fit within the of late fees; the debt collector learns on necessary for clarity and to avoid exception; asked how specific the a Monday that the consumer’s payment circumvention. consumer’s request for information must failed to process, and the applicable 14(b)(3) Certain Telephone Calls be; and asked how many follow-up grace period is set to expire the next telephone call attempts are permitted day; and the debt collector places a Excluded From the Telephone Call 445 Frequencies under the proposed exclusion. A telephone call to the consumer on that group of consumer advocate Monday to remind the consumer that a Proposed § 1006.14(b)(3) would have commenters recommended that the late fee will be applied by the creditor excluded four types of telephone calls exclusion not apply if debt collectors for non-payment unless the consumer placed telephone calls in response to makes the payment by the next day. As from the telephone call frequency limits in proposed § 1006.14(b)(2).442 requests for information that consumers explained in the comment, the fact that submitted through other communication the debt collector placed the telephone Specifically, proposed § 1006.14(b)(3)(i) would have excluded telephone calls media. call to alert the consumer to the pending The Bureau is not providing the made to respond to a request for penalty, giving the consumer an requested clarifications or making the information from the person whom the opportunity to avoid a demonstrably recommended changes because the negative effect that was not in the debt debt collector is calling; proposed Bureau is not finalizing proposed collector’s control and where time was § 1006.14(b)(3)(ii) would have excluded § 1006.14(b)(3)(i). After considering the of the essence, is a factor that may rebut telephone calls made with such person’s comments, the Bureau recognizes that a the presumption of a violation. prior consent given directly to the debt telephone call that a debt collector Comment 14(b)(2)(ii)–2.iv.C provides collector; proposed § 1006.14(b)(3)(iii) places to a person to respond to a a counterexample to the first two would have excluded telephone calls request for information from that person scenarios in which: On a Monday, a that do not connect to the dialed usually also fits under the exclusion for debt collector placed a telephone call to number; and proposed prior consent in proposed a consumer to offer a ‘‘one-time only’’ § 1006.14(b)(3)(iv) would have excluded § 1006.14(b)(3)(ii). Therefore, in an discount on the payment of a debt; the telephone calls placed to a person effort to streamline the final rule, the debt collector stated that the offer would described in proposed § 1006.6(d)(1)(ii) Bureau is not finalizing proposed expire the next day; yet, in fact, the debt through (vi).443 For the reasons § 1006.14(b)(3)(i) and instead is collector could have offered the same or discussed below, the Bureau is not expanding the examples in the a similar discount through the end of finalizing the proposed commentary to the prior consent the month. The comment explains that § 1006.14(b)(3)(i) exclusion for exclusion, renumbered as final because the negative effect on the telephone calls made to respond to a § 1006.14(b)(3)(i), to describe a scenario consumer was in the debt collector’s in which a person, through a request for control, the discount offer is not a factor request for information from the person whom the debt collector is calling. The information, also provides prior consent that may rebut the presumption of a for a debt collector to place additional violation. Bureau is finalizing the other proposed exclusions as § 1006.14(b)(3)(i) through telephone calls, and the debt collector The Bureau has included the rebuttal then places telephone calls to the factor described in comment (iii), with certain revisions discussed below. 14(b)(2)(ii)–2.iv and the illustrative 444 See 84 FR 23274, 23318 (May 21, 2019). examples in comments 14(b)(2)(ii)– 445 However, one industry commenter stated it 2.iv.A through .C based on 442 See 84 FR 23274, 23317–19 (May 21, 2019). was not necessary to clarify how to determine consideration of comments to the 443 Persons described in proposed whether a debt collector makes a particular § 1006.6(d)(1)(ii) through (vi) include the telephone call in response to a request for proposal. As noted earlier in this consumer’s attorney, a consumer reporting agency, information, as opposed to for some other purpose, section-by-section analysis, industry the creditor, the creditor’s attorney, and the debt or how to determine whether the debt collector has commenters presented a variety of fact collector’s attorney. responded to a request for information.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76818 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

person to respond to a request for (§ 1006.14(b)(3)(iii)). The Bureau is Regarding other specific requests for information from that person.446 The excluding these categories of telephone exclusions, industry commenters Bureau also is specifying in comment calls from the § 1006.14(b)(2)(i) explained that the proposed 14(b)(2)(ii)–2.iii that, in the unlikely telephone call frequencies because the § 1006.14(b)(2) telephone call frequency event that a person’s request for Bureau concludes that such telephone limits are in tension with the Bureau’s information from a debt collector does calls are not placed by debt collectors mortgage servicing rules’ live contact not meet the requirements of the prior with intent to annoy, abuse, or harass a and early intervention requirements in consent exclusion in final person and generally do not have the Regulation X, 12 CFR part 1024. § 1006.14(b)(3)(i), the fact that a debt natural consequence of harassing, Another industry commenter identified collector placed a telephone call in oppressing, or abusing any person.450 tension with the U.S. Department of response to a consumer’s request for As discussed in the section-by-section Housing and Urban Development’s additional information is a factor that analysis of § 1006.14(b)(2), the Bureau is Home Equity Conversion Mortgage may be used by a debt collector to rebut finalizing a rebuttable-presumption program regulations, 24 CFR part 206, a presumption of a violation under approach instead of the proposed and State servicing laws that require a § 1006.14(b)(2)(ii).447 telephone call frequency limits. The servicer to attempt to contact a borrower when a loan is initially called due and Scope of Exclusions rebuttable-presumption approach inherently acknowledges that there are payable. Industry commenters also Industry commenters and the SBA individual circumstances, beyond the explained that, during litigation, asked the Bureau to exclude additional categorical exclusions identified in attorneys may be directed to notify the types of telephone calls from the § 1006.14(b)(3), in which telephone calls consumer of scheduling matters, to proposed § 1006.14(b)(2) telephone call exceeding the final § 1006.14(b)(2)(i) coordinate the date for a hearing or frequency limits.448 For example, frequencies are not placed with the mediation, or to respond to settlement industry commenters requested that the intent to annoy, abuse, or harass, and do discussions. Industry commenters also Bureau add an exclusion for telephone not have the natural consequence stated that court rules may require calls required by, or made to comply parties to confer prior to scheduling a with, applicable law, as well as harassing, oppressing, or abusing any person. The rebuttable-presumption hearing. Industry commenters noted telephone calls related to litigation.449 that it may be necessary to have Industry commenters also requested approach will provide debt collectors with many of the flexibilities that they multiple, time-sensitive discussions exclusions for other types of telephone during settlement negotiations, and calls such as telephone calls that would sought from the requested exclusions, while also allowing for consideration of while the proposed consent exclusion be ‘‘beneficial’’ to the consumer; would seem to address this concern, the particular facts and circumstances telephone calls placed to a consumer debt collectors may forget to request surrounding a telephone call that after a consumer does not follow consent from a consumer to place exceeds the final § 1006.14(b)(2)(i) through with an agreed-upon payment additional telephone calls. or the consumer’s payment is declined; frequencies. The Bureau understands that very few telephone calls placed before a debt Depending on the facts and legally required communications must collector has established contact with a circumstances, the Bureau’s rebuttable- be delivered by telephone. However, the person; and ringless voicemails. The presumption approach to telephone call Bureau also acknowledges that legally SBA requested that the Bureau exclude frequencies may, in fact, provide more required communications delivered by all telephone calls placed by small flexibility to debt collectors with respect telephone may facilitate consumer entity debt collectors from the proposed to other scenarios for which engagement and reach consumers more § 1006.14(b)(2) telephone call frequency commenters requested exclusions, such quickly than if other communication limits. as telephone calls that would be media are used. As discussed in more The Bureau declines to add additional beneficial to the consumer and detail in the section-by-section analysis exclusions to § 1006.14(b)(3). As telephone calls placed to a consumer of § 1006.14(b)(2), the telephone calls discussed in the section-by-section after a consumer does not follow that commenters describe could be analysis of § 1006.14(b)(3)(i) through through with an agreed upon payment covered by two factors that a debt (iii), the Bureau is finalizing three of the or the consumer’s payment is declined. collector may use to rebut a proposed exclusions. These exclusions More specifically, as described in presumption of a violation of cover telephone calls placed with a comment 14(b)(2)(ii)–2.iv, another factor § 1006.14(b)(1), including: Whether a person’s prior consent that may be used to rebut a presumption debt collector placed a telephone call to (§ 1006.14(b)(3)(i)), telephone calls that of a violation is whether a debt collector comply with, or as required by, do not connect to the dialed number placed a telephone call to convey applicable law, as discussed in (§ 1006.14(b)(3)(ii)), and telephone calls information to the consumer that, as comment 14(b)(2)(ii)–2.i; and whether a placed to certain professional persons shown through evidence, would provide debt collector placed a telephone call the consumer with an opportunity to that was directly related to active 446 See the section-by-section analysis of avoid a demonstrably negative effect litigation involving the collection of a § 1006.14(b)(3)(i) for more information on the relating to the collection of the exclusion for telephone calls placed with a person’s particular debt, as discussed in prior consent. particular debt, where the negative comment 14(b)(2)(ii)–2.ii.451 447 See the section-by-section analysis of effect was not in the debt collector’s The Bureau also declines to add an § 1006.14(b)(2) for more information on the control, and where time was of the exclusion for telephone calls placed telephone call frequencies and the factors that may essence. rebut the presumption of a violation. before a debt collector has established 448 The Bureau specifically requested comment contact with a person. FDCPA section on this topic. See also the section-by-section 450 The Bureau is finalizing certain limits on 806(5) prohibits a debt collector from analysis of § 1006.14(b)(2) for further discussion of telephone calls placed with a person’s prior consent causing a telephone to ring or engaging comments relating to potential exclusions from the so that such telephone calls do not have the natural proposed telephone call frequency limits. consequence of harassing, oppressing, or abusing any person in a telephone call 449 The SBA requested an exclusion for telephone the person who consented to the additional calls made while a debt collector is trying to telephone calls. See the section-by-section analysis 451 See the section-by-section analysis of negotiate a settlement. of § 1006.14(b)(3)(i). § 1006.14(b)(2).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76819

repeatedly or continuously with intent comply with or violate § 1006.14(b)(1) otherwise pressure consumers into to annoy, abuse, or harass any person at and FDCPA section 806(5). Therefore, providing blanket consent for unlimited the called number, without regard to telephone calls excluded under additional telephone calls over an whether the debt collector has § 1006.14(b)(3) will not be used to unspecified period of time. previously established contact with that determine whether a debt collector has In general, the Bureau believes that a person. At the same time, as described rebutted a presumption of a violation person can determine when additional 453 in the section-by-section analysis of under § 1006.14(b)(2)(ii). telephone calls from, or telephone § 1006.14(b)(2), the Bureau recognizes 14(b)(3)(i) conversations with, a debt collector that debt collectors have a legitimate would not be harassing, and that a debt Proposed § 1006.14(b)(3)(ii) would interest in reaching consumers, and that collector who has a person’s prior have excluded from the proposed communicating with consumers is consent to place additional telephone telephone call frequency limits in central to debt collectors’ ability to calls does not place such calls with § 1006.14(b)(2) telephone calls that a recover amounts owed to creditors. The intent to annoy, abuse, or harass the debt collector places to a person with Bureau expects that the flexibility person. In the proposal, the prior provided by the rebuttable-presumption the person’s prior consent given directly to the debt collector.454 Under the consent exclusion would have lasted approach to telephone call frequencies, until the debt collector reached the discussed in the section-by-section proposal, a debt collector would have been permitted to place as many person who consented to the additional analysis of § 1006.14(b)(2), as well as telephone calls. Therefore, if the debt debt collectors’ ability to leave limited- telephone calls as necessary before reaching the consumer, but once the collector were unable to reach the content messages, discussed in the person, the person’s prior consent to section-by-section analysis of debt collector reached the consumer, further telephone calls would not have additional telephone calls would have § 1006.2(j), will enable debt collectors to lasted indefinitely. The Bureau reach consumers in a timely manner been covered by the prior consent exclusion. Proposed comment recognizes that the debt collector’s without introducing additional additional telephone calls, placed consumer harms. 14(b)(3)(ii)–1 would have referred to the commentary to proposed indefinitely, may have the natural The Bureau declines to add an consequence of which is to harass, exclusion for ringless voicemails for the § 1006.6(b)(4)(i) for guidance concerning a person giving prior consent directly to oppress, or abuse the person in reasons discussed in the section-by- connection with the collection of a debt. section analysis of § 1006.14(b). a debt collector, and proposed comment In response to the SBA’s request to 14(b)(3)(ii)–2 provided an example of The Bureau considered limiting the exclude small entities from the the rule. For the reasons discussed number of telephone calls a debt § 1006.14(b)(2)(i) telephone call below, the Bureau is revising the collector may place under the prior frequencies, the Bureau notes that the proposed prior consent exclusion, consent exclusion, as suggested by final rule applies to debt collectors, as renumbered as § 1006.14(b)(3)(i), to consumer advocate commenters, but that term is used in the FDCPA. Small limit the duration of prior consent to no concluded that such an approach would entities are only excluded from the more than seven consecutive days. be impractical, given that it often takes definition of debt collector to the extent One industry commenter debt collectors multiple telephone calls they meet the criteria for one of the recommended that the Bureau limit the to reach a person. Instead, the Bureau is specific exclusions from the general number of telephone calls permitted per amending proposed § 1006.14(b)(3)(ii), definition.452 day and per week under the renumbered as § 1006.14(b)(3)(i), to § 1006.14(b)(3) exclusions, including the limit the duration of prior consent to no Exclusions Under Rebuttable- prior consent exclusion, while another more than seven consecutive days, Presumption Approach industry commenter opposed such which is the same time period to which A few industry commenters asked the limits. Some industry commenters the telephone call frequencies in Bureau to maintain the proposed explained that it is not necessary to § 1006.14(b)(2)(i) apply. Specifically, § 1006.14(b)(3) exclusions even if the limit telephone calls made under the final § 1006.14(b)(3)(i) provides that final rule adopted a rebuttable- prior consent exclusion because telephone calls placed to a person do presumption approach. One commenter consumers can withdraw consent at any not count toward the § 1006.14(b)(2)(i) explained that maintaining the time. One industry commenter telephone call frequencies if they are exclusions would aid courts in recommended that the proposed placed with such person’s prior consent determining whether the debt collector § 1006.14(b)(2) telephone call frequency given directly to the debt collector and has rebutted the presumption of a limits reset when a consumer asks a within a period no longer than seven violation when excess telephone calls debt collector to call back at another consecutive days after receiving the fall under one or more of the proposed time. Industry commenters also prior consent.455 In addition, as § 1006.14(b)(3) exclusions. requested clarification about what explained in new comment 14(b)(3)(i)– As discussed in the section-by-section constitutes prior consent, whether 2, a person’s seven-consecutive-day analysis of § 1006.14(b)(2), the Bureau is certain scenarios fit within the prior consent described in implementing a rebuttable-presumption exclusion, and how to document prior § 1006.14(b)(3)(i) will expire sooner, if approach in this final rule and finalizing consent. Consumer advocate any of the following occurs prior to the three of the proposed exclusions. commenters requested that the Bureau conclusion of the seven-consecutive-day Telephone calls placed by a debt limit the prior consent exclusion to one period: (1) The person consented to the collector that are excluded under additional telephone call and expressed additional telephone calls for a shorter § 1006.14(b)(3) do not count toward the concern that debt collectors could time period and such time period has telephone call frequencies in ended; (2) the person revokes such prior § 1006.14(b)(2)(i) that determine 453 See the section-by-section analysis of, and commentary to, § 1006.14(b)(2)(i) and (ii) for a non- consent; or (3) the debt collector has a whether a debt collector is presumed to exhaustive list of factors that may be used to rebut presumptions of compliance with, and violation of, 455 The date the debt collector receives prior 452 See the section-by-section analysis of § 1006.14(b)(1) and FDCPA section 806(5). consent counts as the first day of the seven- § 1006.2(i). 454 See 84 FR 23274, 23318 (May 21, 2019). consecutive-day period.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76820 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

telephone conversation with the person telephone calls that a debt collector does not connect to the dialed number regarding the particular debt. places to a person that do not connect if, for example, the debt collector In response to commenters’ requests to the dialed number (e.g., that result in receives a busy signal or an indication for clarification about what constitutes a busy signal or are placed to an out-of- that the dialed number is not in service. prior consent, the Bureau is amending service number).457 Proposed comments Final comment 14(b)(3)(ii)–1 also proposed comment 14(b)(3)(ii)–1, 14(b)(3)(iii)–1 and –2 provided clarifies a number of situations in which renumbered as comment 14(b)(3)(i)–1. examples of telephone calls that do and a telephone call connects to the dialed The comment continues to refer to do not connect to the dialed number. number. First, the comment specifies § 1006.6(b)(4)(i) and its associated For the reasons discussed below, the that a telephone call that is answered, commentary for guidance about giving Bureau is finalizing the exclusion as even if it subsequently drops, has prior consent directly to a debt proposed, but renumbered as connected to the dialed number. The collector, but it also clarifies that § 1006.14(b)(3)(ii) and with certain Bureau understands that dropped nothing in § 1006.14(b)(3)(i) regarding revisions to the proposed commentary. telephone calls pose unique challenges prior consent for telephone call Some industry commenters expressed to debt collectors. Although such calls frequencies permits a debt collector to support for the proposed exclusion for do not fit under the exclusion for communicate, or attempt to telephone calls that do not connect to telephone calls not connected to the communicate, with a consumer as the dialed number, and no commenters dialed number, dropped calls may be prohibited by §§ 1006.6(b) and opposed the proposed exclusion. As addressed by other provisions in this 1006.14(h). described above, one industry final rule. For example, if a debt Industry commenters raised a variety commenter recommended that the collector, at the outset of the telephone of hypothetical scenarios and asked Bureau place limits on the number of call, seeks consent to place additional whether the consent exclusion would telephone calls permitted per day and telephone calls to a person if the apply to specific fact patterns. The per week under the § 1006.14(b)(3) telephone call disconnects, the Bureau is revising proposed comment exclusions, while another industry telephone call placed by the debt 14(b)(3)(ii)–2, renumbered as comment commenter opposed such limits. Several collector following a disconnection 14(b)(3)(i)–3.i through .iii, to address industry commenters raised would be excluded from the how the consent exclusion applies in a hypothetical questions regarding the § 1006.14(b)(2)(i) telephone call number of scenarios raised by operation of the proposed exclusion, frequencies pursuant to the prior commenters. For example, the Bureau is such as whether it would cover consent exclusion in final adding an illustrative example in telephone calls to a full voicemail, § 1006.14(b)(3)(i). Moreover, if a debt comment 14(b)(3)(i)–3.iii that describes dropped telephone calls, telephone calls collector does not seek consent, or the a situation in which a consumer to a disconnected number, and telephone call disconnects before a debt provides prior consent to receive forwarded telephone calls. collector receives a person’s prior additional telephone calls by sending an The Bureau determines that a person consent, a debt collector who places email to the debt collector requesting is unlikely to know about, and is not another telephone call to the person additional information. harassed by, a debt collector’s telephone shortly after the disconnection may be Industry commenters also asked about call in response to which the debt able to rebut the presumption of a how to document a consumer’s prior collector receives a busy signal or a violation under § 1006.14(b)(2)(ii), consent. The Bureau declines to message indicating that the dialed depending on the facts and prescribe a specific manner in which number is not in service. Similarly, a circumstances surrounding the follow- debt collectors could document a debt collector who places several up telephone call.458 consumer’s prior consent. However, as telephone calls to a person in response Second, commenters presented discussed in the section-by-section to which the debt collector receives a variations of the scenario where a debt analysis of § 1006.100(a), debt collectors busy signal or out-of-service notification collector places a telephone call to a must retain records created in the likely places additional telephone calls consumer and then hears nothing. In ordinary course of business that to the person in an effort to contact the this scenario, if the telephone call is evidence compliance with the FDCPA person and not with the intent to annoy, connected to the dialed number, even if and Regulation F, as well as records abuse, or harass the person. For these the debt collector hears only silence, the created in the ordinary course of reasons, the Bureau is finalizing the telephone call does not meet the business that evidence that the debt proposed exclusion for telephone calls § 1006.14(b)(3)(ii) exclusion criteria. If a collector refrained from conduct that do not connect to the dialed debt collector is unsure whether the prohibited by the FDCPA and the number, without additional limits. telephone call connected to the dialed regulation.456 The Bureau is finalizing proposed number, the debt collector should treat comment 14(b)(3)(iii)–1, with revisions 14(b)(3)(ii) the telephone call as connected to the and renumbered as comment dialed number and count the telephone Proposed § 1006.14(b)(3)(iii) would 14(b)(3)(ii)–1, in response to a number call toward the § 1006.14(b)(2)(i) have excluded from the frequency limits of the hypothetical questions raised by frequencies. commenters regarding the operation of Lastly, final comment 14(b)(3)(ii)–1 456 See comment 100(a)–1 for examples of the exclusion. With respect to such clarifies that a debt collector’s telephone evidence a debt collector could retain. Comment 100(a)–2 explains that a debt collector need not questions, the Bureau is addressing only create and maintain additional records, for the sole the most likely scenarios, as follows. 458 As discussed in the section-by-section analysis purpose of evidencing compliance, that the debt First, commenters asked about debt of § 1006.14(b)(2)(ii), one factor for rebutting the collector would not have created in the ordinary collectors placing telephone calls to a presumption of a violation as described in comment course of its business in the absence of the record 14(b)(2)(ii)–2.iv is whether a debt collector placed retention requirement set forth in § 1006.100(a). disconnected telephone number. As in a telephone call to convey information to the Comment 100(a)–3 explains that records may be the proposal, final comment 14(b)(3)(ii)– consumer that, as shown through evidence, would retained by any method that reproduces the records 1 covers such scenarios by explaining provide the consumer with an opportunity to avoid accurately (including computer programs) and that a demonstrably negative effect relating to the ensures that the debt collector can easily access the that a debt collector’s telephone call collection of the particular debt, where the negative records (including a contractual right to access effect was not in the debt collector’s control, and records possessed by another entity). 457 See 84 FR 23274, 23318 (May 21, 2019). where time was of the essence.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76821

call connects to the dialed number if the telephone calls are not placed by debt commenters warned that current system telephone call is connected to a collectors with intent to annoy, abuse, capabilities may not be able to support voicemail or other recorded message, or harass a person, and are highly per-person telephone call frequencies even if the debt collector is unable to unlikely to have the natural because the systems are not set up to leave a voicemail. In situations where a consequence of which is to harass, consolidate information about different debt collector is unable to leave a oppress, or abuse a person for purposes debts owed by the same consumer, and voicemail, the debt collector’s telephone of the FDCPA and final rule. The Bureau any system changes would result in call may have caused the consumer’s therefore is finalizing proposed extensive reprogramming and training telephone to ring or may otherwise § 1006.14(b)(3)(iv) with minor costs. Consumer and consumer advocate leave evidence of the telephone call. grammatical changes and renumbered as commenters argued that debt collectors’ The same is not true of telephone calls § 1006.14(b)(3)(iii). systems should be able to consolidate that do not connect to the dialed account information for each consumer, 14(b)(4) Definition number. The comment also specifies and that debt collectors should be able that a telephone call has connected to Proposed § 1006.14(b)(5) would have to identify all debts a consumer owes the dialed number if the telephone call defined the term particular debt for and discuss them at the same time to is connected to a voicemail or other purposes of proposed § 1006.14(b) to prevent harassment through excessive recorded message even if the call did mean each of a consumer’s debts in telephone calls placed to consumers not cause the telephone to ring. collection, except for student loan with multiple debts in collection. Based on feedback, another likely debts.460 With respect to student loan Some industry commenters cautioned scenario involves a debt collector debts, the Bureau proposed the term that, if the Bureau adopted a per-person placing a telephone call that is particular debt to mean all debts that a approach to telephone call frequencies, forwarded to another telephone number. consumer owes or allegedly owes that debt collectors’ calling practices would Although not clarified in commentary, were serviced under a single account be too restricted when collecting on the Bureau believes that, in this number at the time the debts were multiple debts owed by the same situation, the exclusion for unconnected obtained by the debt collector. The consumer. These industry commenters telephone calls in final Bureau also proposed to clarify how the warned that the market would respond § 1006.14(b)(3)(ii) would not apply telephone call frequency limits in by selling different debts to different because the forwarded telephone call is proposed § 1006.14(b)(2) would apply debt collectors or staging and handled by the dialed number; thus, the when a consumer has multiple debts prolonging debt collection—both telephone call connects to the dialed being collected by the same debt outcomes that, they asserted, would number. collector at the same time.461 For the harm consumers. 14(b)(3)(iii) reasons discussed below, the Bureau is On the other hand, consumer, finalizing proposed § 1006.14(b)(5) with consumer advocate, State Attorneys Proposed § 1006.14(b)(3)(iv) would one minor grammatical change and General, State legislator, and local have excluded from the frequency limits renumbered as § 1006.14(b)(4). The government commenters, among others, telephone calls that a debt collector Bureau is also revising the proposed generally urged the Bureau to adopt a places to the consumer’s attorney, a commentary and adding additional per-person approach.462 Some consumer reporting agency, the creditor, examples of the rule. commenters argued that the proposed the creditor’s attorney, or the debt per-debt approach permits an Per-Debt Versus Per-Person Telephone collector’s attorney (i.e., the persons unreasonably high number of telephone Call Frequencies described in proposed and final calls and weakens the FDCPA’s § 1006.6(d)(1)(ii) through (vi)).459 Industry commenters generally consumer protections. Citing data from As discussed in the proposal, debt supported the proposed per-debt the CFPB Debt Collection Consumer collectors may have non-harassing approach to telephone call frequencies. Survey showing that 75 percent of reasons for calling these persons more The Bureau received hundreds of people with one debt in collection have often than the § 1006.14(b)(2)(i) comments from the credit and multiple debts in collection,463 some of telephone call frequencies. For example, collections industry stating that a per- these commenters argued that the during litigation, a debt collector may debt approach is consistent with current proposed per-debt approach would need to speak frequently with its own debt collection practices and provides allow debt collectors to harass attorneys, as well as with the creditor’s flexibility to use account-specific consumers with multiple debts by or the consumer’s attorneys. Telephone approaches and strategies for different potentially placing hundreds of calls to these persons also are highly types of debts, different account telephone calls per week. Some unlikely to have the natural balances, and debts in different stages of commenters identified the consequence of harassing, oppressing, collection. Some industry commenters ineffectiveness of repeated telephone or abusing them for purposes of the explained that different clients have calls as another reason to adopt a per- FDCPA and final rule. different data privacy requirements for person approach.464 A State Attorney A consumer advocate and industry the collection of their debts. Industry commenter supported this proposed 462 The Bureau also received a large number of exclusion. As described above, one 460 See id. at 23320. comments from consumers advocating for a per- industry commenter recommended that 461 The Bureau proposed this clarification person approach. the Bureau place limits on the number because most consumers with at least one debt in 463 See CFPB Debt Collection Consumer Survey, of telephone calls permitted per day and collection have multiple debts in collection. See supra note 16, at 13, table 1. CFPB Debt Collection Consumer Survey, supra note 464 One commenter supported this assertion by per week under the § 1006.14(b)(3) 16, at 13, table 1; see also Bureau of Consumer Fin. pointing to a pilot program focused on servicing exclusions, while another industry Prot., Consumer credit reports: A study of medical defaulted student loans where the Bureau of the commenter opposed such limits. The and non-medical collections, at 20 (Dec. 2014), Fiscal Service at the U.S. Department of the Bureau concludes that additional limits https://files.consumerfinance.gov/f/201412_cfpb_ Treasury placed more than 21,000 telephone calls reports_consumer-credit-medical-and-non-medical- in an attempt to initiate a dialogue regarding the are not necessary because these collections.pdf (CFPB Medical Debt Report) borrower’s debt. Borrowers answered the telephone (reporting that most consumers with one collections calls less than 2 percent of the time. U.S. Dep’t of 459 See 84 FR 23274, 23318 (May 21, 2019). tradeline have multiple collections tradelines). Continued

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76822 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

General commenter stated that debt harm to themselves. A consumer’s debts number, and therefore such an approach collectors in a particular State that also may enter collection at different would provide little consumer benefit. limits telephone call frequency to three times and thus be at different stages of Other industry commenters generally telephone calls per week per consumer the collections process, such that the urged the Bureau to adopt a per-debt have not been hindered in their ability different debts may be eligible for rule for all debts, including student loan to collect debt responsibly. A number of different types of settlement offers. The debts. These commenters argued that all commenters also argued that the Bureau also recognizes that some debt types should be treated the same in consumer benefits of the proposed limit consumers may not be able or prepared order to not confuse the consumer and of one telephone conversation per week to discuss more than one debt during a to ensure that the debt collector can will become illusory with a per-debt single telephone call or may find it adequately provide accurate information approach because consumers with overwhelming, confusing, or simply too to the consumer. They stated that multiple debts in collection will time consuming to discuss multiple because most debtors have more than continue to receive telephone calls debts, with different terms and offers, one debt in collection, aggregating about other debts from debt collectors. during a single telephone call. Debt certain debts but not others will cause Some industry commenters believed collection conversations could become confusion, and that during some that consumers would be overwhelmed even more complicated if, for example, conversations with a debt collector, a and confused if, under a per-person a consumer wanted to dispute one or consumer will need to distinguish approach, debt collectors were forced to some, but not all, of the debts. between multiple debts. The Bureau discuss multiple debts in a single As discussed in the proposal, the also declines to adopt this approach. telephone call with a consumer. Bureau considered proposing a per- With respect to the collection of Consumer and consumer advocate person approach to the telephone call multiple student loan debts that were commenters, among others, rejected this frequencies, but was concerned that serviced under a single account number assertion, arguing instead that the creditors could sidestep a per-person at the time the debts were obtained by proposed per-debt approach would limit by placing debts with debt a debt collector, the debt collector and overwhelm consumers financially and collectors who collect for only one or a consumer generally interact as if there emotionally. Specifically, these limited number of creditors or by were only a single debt. Multiple commenters predicted that the proposed assigning only a single debt to any one student loan debts are often serviced per-debt approach would cause an debt collector; or that debt collectors under a single account number and increased use of mobile telephone could sequence collection of a billed on a single, combined account minutes and data; result in emotional consumer’s debts, thereby prolonging statement; have a single total amount harms such as chronic stress, shame, the collections process for some debts. due; and require a single payment from and anxiety; and manifest physically in Industry commenters affirmed the the consumer. As a result, many the form of stress to the immune system likelihood of these outcomes if the consumers already experience multiple and elevated blood pressure. The Bureau understands that, if a Bureau were to adopt a per-person student loan debts as a single debt, and consumer has multiple debts in approach. So, while technology that the Bureau concludes that adopting collection, either from one creditor or would enable debt collectors to such an approach in the final rule is from multiple creditors, sometimes a consolidate information about different unlikely to confuse consumers or cause single debt collector will attempt to debts owed by the same consumer, consumers to get inaccurate collect some or all of them. Debt including across different creditor- information. collectors in this situation typically clients, may exist, a per-person Some industry commenters also make distinct efforts to collect each debt approach may not actually alter the cautioned that the proposal to aggregate rather than, for example, asking the overall telephone call frequency student loans could be problematic for consumer about all debts during a single experienced by consumers who have a debt collector who is collecting on telephone call. Although some multiple debts in collection and may both Federal and private student loan commenters argued that addressing all raise other concerns. For this reason, the debt. For example, the commenters debts in one telephone call could be Bureau declines to adopt a per- noted that current regulations governing more consumer-protective and decrease consumer approach and is finalizing the loans held by the Department of telephone call frequency, there are per-debt approach as proposed. Education prohibit the sharing of legitimate reasons why debt collectors Aggregating Student Loan Debts information with any other debt segregate debts. For example, larger debt collector database as well as the sharing collectors often collect multiple debts As noted, the Bureau proposed the of information with other debt collectors owed by the same consumer to different term particular debt to mean, for student who may be attempting to contact the creditors, and many creditors require loan debts, all debts that a consumer borrower. The commenters also these debt collectors to work each owes or allegedly owes that were explained that it would be unworkable account separately (e.g., a large serviced under a single account number for debt collectors to combine student collection firm may have a dedicated at the time the debts were obtained by loans that were originated with different group of collectors exclusively working the debt collector. lenders, and have different loan a particular credit card brand). Creditors One industry commenter specifically agreements, loan types, origination impose these requirements, among other supported this proposal and also dates, fees, interest rates, and default reasons, to direct and monitor more recommended that the Bureau adopt the dates. The Bureau believes that these closely the activities and legal same rule for all debts that are commenters may have misunderstood compliance of debt collectors working aggregated by a creditor and serviced the proposal. Because Federal and their accounts to avoid reputational under a single account-number before private student loans, and loans assignment to a debt collector. The originated by different lenders, would Treasury, Report on Initial Observations from the Bureau declines to do so because the not be serviced under the same account Fiscal-Federal Student Aid Pilot for Servicing Bureau understands that debts other number at the time the debts were Defaulted Student Loan Debt, at 3 (July 2016), https://www.treasury.gov/connect/blog/Documents/ than student loan debts are often not obtained by a debt collector, a debt student-loan-pilot-report-july-2016.pdf. serviced under the same account collector would not be required to treat

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76823

those student loan debts as a single in the Larger Participant Rule, such an charges for a general service and instead debt. approach could require certain debt individually bill each visit, which is Some commenters stated that the collectors to aggregate Federal and further itemized by each provider, proposed approach was open to abuse private student loan debt information, facility, and service performed or good by the industry. These commenters were which, as commenters noted, may be provided. The commenters explained concerned that lenders and servicers prohibited by Federal law. that a consumer’s medical debt from one would assign different account numbers Other commenters suggested that, creditor may have numerous unique to student loan debts to prevent instead of aggregating one type of debt, account numbers. Another industry aggregation if the student loan debts the Bureau should lower the telephone commenter identified the need to were to end up in collection later on. call frequencies and apply such maintain compliance with State and One commenter suggested instead that frequencies on a per-person basis. As Federal medical privacy laws, although the Bureau measure telephone call discussed in the section-by-section the commenter did not identify specific frequency by accounts as that term is analysis of § 1006.14(b)(2), the Bureau is challenges that the proposal or described for purposes of the student not finalizing the proposed telephone alternatives would create. loan servicing market in § 1090.106 of call frequency limits. Instead, the According to the CFPB Debt the Defining Larger Participants of Bureau is finalizing a rebuttable- Collection Consumer Survey, medical Certain Consumer Financial Product presumption approach to telephone call debt is the most common type of past- and Service Markets regulation (Larger frequencies. The rebuttable- due bill or payment for which Participant Rule), rather than by presumption approach contemplates consumers reported debt collectors particular debt.465 that there may be circumstances in contacted them. More than half of The Bureau believes that it is unlikely which telephone call frequencies below consumers who said they were that its proposed approach will be the limits proposed in § 1006.14(b)(2) contacted about a debt in collection exploited in the ways these commenters may violate § 1006.14(b)(1) and FDCPA noted that it was related to medical 468 described. Whether a debt collector is section 806(5).467 debt. The Bureau recognizes that required to aggregate student loan debts For all these reasons, the Bureau is consumers do not have control over depends on whether the servicer finalizing the proposed approach to how medical debt is billed to them and serviced the student loans under the aggregate student loan debts serviced acknowledges that, under current same account number at the time they under a single account number at the medical debt billing practices, one were obtained by a debt collector. time the debts were obtained by a debt medical event can result in multiple Servicers have little incentive to incur collector. debts for a consumer. However, the Bureau also recognizes the cost of replacing their efficient Aggregating Medical Debts practice of servicing multiple student that there are significant operational challenges with aggregating medical loan debts under a single account Commenters, including consumer debt. As discussed above, the Bureau number and billing such debts on a advocate commenters, expressed has identified concerns with single, combined account statement that concern about potential excessive implementing a per-person approach to has a single total amount due and telephone call volume with respect to the § 1006.14(b)(2)(i) telephone call requires a single payment from the the collection of medical debts frequencies generally. In addition, in consumer, with the less efficient specifically. One commenter explained contrast to some student loans, medical practice of billing each student loan that it is not uncommon for a single debts from one creditor may have debt individually, just so a possible medical appointment to result in bills numerous unique account numbers. future debt collector could place from multiple providers, each of which Therefore, the Bureau declines to telephone calls in accordance with the could end up in collections if the aggregate medical debts by account § 1006.14(b)(2)(i) telephone call patient is unable to pay. The commenter number for purposes of the telephone frequencies with respect to each stated that the per-debt approach to call frequencies in § 1006.14(b)(2)(i). individual student loan debt. In telephone call frequencies would However, as discussed below, the addition, the Bureau declines to use increase the likelihood that a single Bureau is committed to monitoring this accounts as that term is described in medical emergency would result in issue closely after the final rule is § 1090.106 of the Larger Participant dozens of telephone calls each week, implemented and, if necessary, will Rule. In the Larger Participant Rule, an which the Bureau has recognized has a reconsider how the § 1006.14(b)(2)(i) individual account is one for which a deleterious effect on consumer well- telephone call frequencies apply to financial institution is serving a specific being. Commenters often cited a fact medical debts. borrower for a specific stream of fees pattern in which a debt collector places The Bureau also emphasizes that from a creditor. As discussed in the 56 telephone calls to an alleged debtor consumers can control when, how, and preamble to the Larger Participant Rule, in a week because the debt collector is even if debt collectors can contact them. if a servicer is paid one fee by a lender collecting on eight medical debts Section 1006.6(b)(1) prohibits a debt for servicing both Federally insured stemming from the same medical collector from, among other things, loans and private education loans for a incident. However, these commenters communicating or attempting to particular student, there would only be generally did not advocate for communicate with a consumer in one account for the borrower for aggregation of medical debt. Instead, connection with the collection of any purposes of determining whether the they advocated for a per-person debt at a time or place that the debt servicer is considered a larger approach to telephone call frequencies collector knows or should know is participant of the student loan servicing for all debt. inconvenient to the consumer. In market.466 If implemented as described Some industry commenters asserted that healthcare providers do not addition, § 1006.14(h)(1) provides that, in connection with the collection of any 465 Section 1090.106 describes an individual typically maintain a rolling total of account as one where a financial institution is debt, a debt collector must not serving a specific borrower for a specific stream of 467 See the section-by-section analysis of fees from a creditor. § 1006.14(b)(2) for a more thorough discussion of 468 See CFPB Debt Collection Consumer Survey, 466 78 FR 73383, 73388 (Dec. 6, 2013). the telephone call frequencies. supra note 16, at 21, figure 2.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76824 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

communicate or attempt to the telephone call frequency under 14(h) Prohibited Communication communicate with a person through a § 1006.14(b)(2)(i)(A) and if a debt Media 469 medium of communication, including collector has engaged in a telephone 14(h)(1) In General telephone calls, if the person has conversation for purposes of The Bureau proposed § 1006.14(h)(1) requested that the debt collector not use determining whether subsequent to prohibit a debt collector from that medium to communicate with the telephone calls meet the telephone call communicating or attempting to person. A consumer may also notify a frequency under § 1006.14(b)(2)(i)(B). debt collector in writing that the communicate with a consumer through consumer wants the debt collector to As provided in comment 14(b)(4)–1.i, a medium of communication if the cease further communication with the if a debt collector places a telephone consumer has requested that the debt consumer with respect to a debt, and call to a person and initiates a collector not use that medium to pursuant to § 1006.6(c)(1), a debt conversation or leaves a voicemail about communicate with the consumer.470 collector must not communicate or one particular debt, the debt collector Pursuant to its authority under FDCPA attempt to communicate further with counts the telephone call as a telephone section 814(d) to write rules with the consumer with respect to that debt. call in connection with the collection of respect to the collection of debts by debt For the reasons discussed above, the the particular debt, subject to the collectors, the Bureau proposed Bureau is renumbering § 1006.14(b)(5) exclusions in § 1006.14(b)(3). If a debt § 1006.14(h)(1) as an interpretation of as § 1006.14(b)(4) and finalizing it collector places a telephone call to a FDCPA section 806, which prohibits a generally as proposed. The Bureau is person and initiates a conversation or debt collector from engaging in any conduct the natural consequence of making one minor grammatical leaves a voicemail about more than one which is to harass, oppress, or abuse amendment. Specifically, the Bureau is particular debt, the debt collector counts replacing the article ‘‘the’’ preceding the any person in connection with the the telephone call as a telephone call in collection of a debt. For the reasons phrase ‘‘debt collector’’ with ‘‘a’’ to connection with the collection of each account for circumstances in which a discussed below, the Bureau is adopting such particular debt, subject to the debt collector collecting student loan this proposed interpretation and exclusions in § 1006.14(b)(3). If a debt debts is not the same debt collector that finalizing § 1006.14(h)(1) largely as obtained such debts from the entity collector places a telephone call to a proposed, while revising it to apply to servicing the student loans. Final person but neither initiates a a ‘‘person,’’ as defined under § 1006.14(b)(4) thus provides that the conversation about a particular debt nor § 1006.2(k). term particular debt means each of a leaves a voicemail that refers to a Consumer commenters supported the consumer’s debts in collection, except particular debt, or if the debt collector’s proposal to permit a consumer to limit that, in the case of student loan debts, telephone call is unanswered, the debt the communication media used by a the term means all student loan debts collector counts the telephone call as a debt collector, and consumer advocate, that a consumer owes or allegedly owes telephone call in connection with the government, and industry commenters that were serviced under a single collection of at least one particular debt, generally supported proposed account number at the time the debts unless an exclusion in § 1006.14(b)(3) § 1006.14(h)(1) as offering consumers were obtained by a debt collector. The applies. more control over communications received from debt collectors. Bureau expects to monitor the market in As provided in comment 14(b)(4)–1.ii, response to the final rule. If substantial Consumer advocates agreed that a if a debt collector and a person discuss debt collector should be required to stop evidence develops that debt collectors one particular debt during a telephone who are placing telephone calls in calling specific telephone numbers and conversation, the debt collector has sending email, text messages, or other compliance with the per-debt telephone engaged in a telephone conversation in call frequencies are nonetheless electronic communications upon the connection with the collection of the harassing consumers, the Bureau could consumer’s request. Describing particular debt, regardless of which potentially revisit the per-debt approach proposed § 1006.14(h)(1) as a critical to telephone call frequencies for all or party initiated the discussion about the consumer protection, one consumer certain types of debts, such as medical particular debt, subject to the exclusions advocate stated that clarifying this right debts, in a future rulemaking. in § 1006.14(b)(3). If a debt collector and under the FDCPA will ensure that The Bureau also is revising a person discuss more than one consumers are not harassed while also commentary to proposed § 1006.14(b)(5) particular debt during a telephone allowing them to communicate with in response to requests for clarification conversation, the debt collector has debt collectors without requesting that from several industry commenters. engaged in a telephone conversation in the debt collector stop all Some of these commenters asked connection with the collection of each communication, thus preventing whether particular types of calls would such particular debt, regardless of unnecessary debt collection lawsuits count toward the proposed telephone which party initiated the discussion from being filed. Consumer advocates calling limits, while others asked how to about the particular debts, subject to the also stated that the Bureau’s aggregate or otherwise count such calls. exclusions in § 1006.14(b)(3). If no interpretation is consistent with FDCPA A number of commenters offered particular debt is discussed during a section 806, specifically FDCPA section suggestions for resolving such telephone conversation between a debt 806(5) where some courts have found hypotheticals while others did not. collector and a person, the debt consumers stated a claim for violations In response to commenters’ questions, collector counts the conversation as a of the FDCPA when debt collectors the Bureau is amending proposed telephone conversation in connection continued to call after being asked to comment 14(b)(5)–1, renumbered as with the collection of at least one stop. Other consumer advocates comment 14(b)(4)–1, to include particular debt, unless an exclusion in 469 As noted above, § 1006.14(c) through (g) additional examples to illustrate the § 1006.14(b)(3) applies. rule. The Bureau also is adding generally mirror the statute, with minor wording Final comment 14(b)(4)–2 provides and organizational changes for clarity and therefore comments 14(b)(4)–1.i and .ii to explain are not further discussed in this section-by-section if a debt collector has placed a examples of the rules for counting analysis. telephone call for purposes of counting telephone calls under various scenarios. 470 84 FR 23274, 23321–22 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76825

suggested that consumers would benefit conversations to include various mobile communication request for purposes of greatly from being able to specify and portable technologies that were not § 1006.6(c). contact through various contemplated in 1977. For example, In response to commenters’ requests, communications media, allowing with the advent of the mobile telephone, the Bureau notes that, as discussed in consumers the ability to stop telephone a person may receive a telephone call at the section-by-section analysis of calls, for example, or other types of any time or place. As the Bureau’s § 1006.6(c), FDCPA section 805(c), as communication without stopping all Consumer Survey indicated, consumers implemented by § 1006.6(c), provides communications. have varied but strong preferences about that, subject to certain exceptions, if a A group of State Attorneys General the media that debt collectors use to consumer notifies a debt collector in agreed that consumers should be able to communicate with them.471 Once a writing that the consumer refuses to pay put any limitations on the use of new person has requested that a debt a debt or that the consumer wishes the technology that they desire, and that, collector not use a specific medium of debt collector to cease further because consumers already have an communication to communicate with communication with the consumer, the absolute right to demand that debt that person, the Bureau believes that the debt collector shall not communicate collection communications cease, they natural consequence of further further with the consumer with respect should have the right to place any lesser communications or attempts to to such debt.472 Separately, the Bureau limitations on communication, such as communicate from the debt collector to is finalizing § 1006.14(h)(1) as an limitations on medium or frequency of that person using that same medium interpretation of FDCPA section 806, communication. Additionally, one likely is harassment, oppression, or which, in relevant part, prohibits a debt academic commenter explained that abuse of that person. Consistent with collector from engaging in any conduct people are sensitive to communication this interpretation, the Bureau the natural consequence of which is to methods and that, even when internet understands that some debt collectors harass, oppress, or abuse any person in access is reliable, many people may currently refrain from communicating connection with the collection of a prefer to communicate in person, by with a person through a medium that debt.473 Therefore, whereas telephone, or by letter, including some the person has requested the debt § 1006.6(c)(1) would prohibit a debt people with mental illness, who may collector not use to communicate with collector, subject to certain exceptions, struggle with electronic communication that person, including, for example, from all further communications or due to confusion about how to use it or specific telephone numbers that a attempts to communicate with a concerns about safety and privacy. person has asked the debt collector not consumer regarding a particular debt, A number of industry commenters to call. § 1006.14(h)(1) would prohibit a debt generally agreed with proposed collector from communications or § 1006.14(h)(1) on the basis that Accordingly, the Bureau is finalizing § 1006.14(h)(1) as proposed and revising attempts to communicate with a person consumer requests must be respected through a medium of communication when it comes to their preferred it to apply to a ‘‘person.’’ Consistent with its authority under FDCPA section that the person has requested the debt methods of communication. One collector not use to communicate with industry commenter stated that the 814(d) to write rules with respect to the collection of debts by debt collectors, the person for all debts. Although these proposal would allow a debt collector to provisions are distinct in their reliance communicate with a consumer while and because the Bureau is adopting § 1006.14(h)(1) as an interpretation of on separate FDCPA authorities (FDCPA also providing adequate consumer sections 805(c) versus 806), in principle safeguards by prohibiting the debt FDCPA section 806, which prohibits a debt collector from engaging in any they are similar in that they both afford collector from communicating with the an individual greater control over the consumer through communication conduct the natural consequence of which is to harass, oppress, or abuse communications received from a debt media that the consumer requested the collector. However, final § 1006.14(h)(1) debt collector not use. And one trade ‘‘any person’’ in connection with the collection of a debt, the Bureau is is narrower than final § 1006.6(c)(1) in group commenter supported proposed that, depending on the request by the § 1006.14(h)(1) and agreed it is finalizing § 1006.14(h)(1) to apply to a person, as defined under § 1006.2(k), person, final § 1006.14(h)(1) prohibits a consistent with FDCPA section 806. debt collector from communicating or Some industry commenters opposed and not to limit it as proposed to a attempting to communicate with that the proposal in § 1006.14(h)(1) as consumer as defined under § 1006.6(a). person only through a specific needlessly restrictive and difficult to One consumer advocate suggested communication medium or media and implement and stated that it would offer that the rule should provide that a does not constitute a broader few, if any, countervailing consumer consumer’s demand to stop any one communication restriction, whereas benefits. One industry commenter stated communication medium should stop all final § 1006.6(c)(1) prohibits a debt that proposed § 1006.14(h)(1) would communications, unless the consumer collector from all further limit a debt collector on how best to affirmatively specifies otherwise, while communications or attempts to communicate with consumers who may a group of consumer advocates similarly communicate with a consumer. have a preference of one communication suggested that one opt-out request (e.g., One industry commenter requested method over another. One trade group in response to an email) be applied to that the Bureau adopt a safe harbor for commenter suggested that proposed all types of communications from the up to seven days to allow a debt § 1006.14(h)(1) impermissibly expands creditor, debt collector, and debt buyer collector’s systems reasonable time to the scope of the FDCPA. for a given debt. Two industry update a consumer request pursuant to The Bureau determines that commenters, on the other hand, proposed § 1006.14(h)(1). For reasons § 1006.14(h)(1) affords various requested that the Bureau clarify that a similar to those discussed in the consumer benefits and protections. consumer’s request to no longer receive section-by-section analysis of Since the enactment of the FDCPA, the communications through one medium is possible media through which not to be treated as a blanket cease 472 See 15 U.S.C. 1692c(c). See the section-by- communications generally are section analysis of § 1006.6(c) for additional conducted has expanded beyond 471 See CFPB Debt Collection Consumer Survey, discussion. telephone, mail, and in-person supra note 16, at 36–37. 473 See 15 U.S.C. 1692d.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76826 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

§ 1006.6(c)(1), this final rule does not communication media, suggesting that § 1006.14(h)(1) may be made using any specify the period of time afforded a the Bureau require debt collectors to reasonable method, for example orally, debt collector to update its systems to orally notify consumers in each debt whereas two industry commenters reflect a person’s request under collection call about the right to opt out asked the Bureau to require that the § 1006.14(h)(1). However, depending of receiving telephone calls. Similarly, request must be made in writing. The upon the circumstances, FDCPA section one local government commenter stated Bureau declines to adopt a writing 813(c)’s bona fide error defense to civil the Bureau should ensure that debt requirement. While FDCPA section liability may apply where, collectors clearly and conspicuously 805(c), as implemented by § 1006.6(c), notwithstanding the maintenance of convey to consumers that they have the requires a consumer to notify a debt procedures reasonably adapted to avoid option to not only opt out of electronic collector in writing, that provision any such error, a debt collector communications, but that they can applies only if a consumer wishes a debt communicates or attempts to choose not to receive any telephone collector to cease all communication; communicate with a person through a calls or telephone calls to a particular the Bureau concludes that a similar medium of communication after the number. writing requirement is not necessary or person has requested that the debt The Bureau determines that warranted in the context of collector not use that medium but before consumers, without additional § 1006.14(h)(1), which provides a the debt collector has implemented the disclosures, currently make such person with the opportunity to make a person’s request.474 requests of debt collectors and will narrower request regarding A group of consumer advocates stated likely continue to do so. In addition, the communication media. As discussed in that the Bureau should require all procedures in § 1006.6(e) require a debt the section-by-section analysis of consumer requests to stop a debt collector to disclose to a consumer the § 1006.6(c)(1), the Bureau declines to collector’s communications through a ability to opt out of electronic extend § 1006.6(c)(1) to oral requests but particular medium be noted in the debt communications to a particular email does clarify that, depending on the facts collector’s file and transferred to the address, telephone number, or other and circumstances, a consumer’s oral creditor or a subsequent debt collector, electronic-medium address. request to, for example, ‘‘stop calling’’ and in turn, should provide that future Accordingly, the Bureau declines to would constitute a request that the debt debt collectors would be obligated to include an additional disclosure collector not use that medium of honor the consumer’s request. Similarly, requirement related to § 1006.14(h). communication (e.g., telephone calls) to one local government commenter For the reasons discussed above, the communicate with the consumer, and requested that the Bureau require a debt Bureau is finalizing § 1006.14(h)(1) to consistent with § 1006.14(h)(1), the debt collector selling or otherwise provide that, in connection with the collector would thereafter be prohibited transferring a debt to another debt collection of any debt, a debt collector from placing telephone calls to the collector to share any instructions by must not communicate or attempt to consumer.476 The Bureau is adopting the consumer opting out of any medium communicate with a person through a new comment 14(h)(1)–3.i to provide an of communication. One trade group medium of communication if the person example illustrating this aspect of the commenter suggested that, if a has requested that the debt collector not rule. consumer requested a previous debt use that medium to communicate with Additionally, the Bureau is adopting collector not use a particular medium, the person. new comment 14(h)(1)–3.ii to provide The Bureau also proposed the subsequent debt collector should be an example illustrating a consumer’s commentary to § 1006.14(h)(1). granted a safe harbor until the consumer request to opt out in response to receipt Proposed comment 14(h)(1)–1 referred communicates that preference. of either the opt-out procedures The proposal would not have required to comment 2(d)–1 for examples of described in final § 1006.6(d)(4)(ii) or communication media. The Bureau a debt collector to transfer such the opt-out notice in final § 1006.6(e). received no comments on proposed information to a creditor or subsequent Assuming that, in response to receipt of comment 14(h)(1)–1 and is finalizing it debt collector, and neither does this either the opt-out notice described in largely as proposed, with certain final rule.475 A debt collector thus § 1006.6(d)(4)(ii) or the opt-out revisions to include, similar to comment would not be bound by a request that a instructions in § 1006.6(e), a consumer 6(b)(1)–1, that a debt collector may ask person had submitted to a prior debt requests to opt out of receiving follow-up questions regarding preferred collector under § 1006.14(h). While this electronic communications from a debt communication media to clarify approach may require a person to again collector at a particular email address or statements by the person. request that a medium of telephone number, comment 14(h)(1)– Proposed comment 14(h)(1)–2 3.ii clarifies that the consumer has communication not be used if an clarified that, within a medium of account is transferred from one debt requested that the debt collector not use communication, a consumer may that email address or telephone number collector to another, the Bureau believes request that a debt collector not use a that, as described in the section-by- to electronically communicate with the specific address or telephone number consumer for any debt. Thereafter, section analysis of § 1006.6(e), a person and provided an example. The Bureau who objects to one debt collector’s use § 1006.14(h)(1) prohibits the debt received no comments on proposed collector from electronically of a medium of communication might comment 14(h)(1)–2 and is finalizing it not object to another debt collector’s use communicating or attempting to largely as proposed, with certain communicate with the consumer of that same medium. revisions consistent with A group of consumer advocates through that email address or telephone § 1006.14(h)(1). number. requested that the Bureau address how Commenters requested clarification consumers will learn of their right to ask with respect to how a person may 14(h)(2) Exceptions debt collectors not to use certain invoke the protections that would be The Bureau proposed § 1006.14(h)(2) afforded under proposed 474 See the section-by-section analysis of to provide two exceptions to the general § 1006.6(c)(1). § 1006.14(h)(1). A number of consumer 475 See the section-by-section analysis of advocates requested that the Bureau 476 See the section-by-section analysis of § 1006.6(b)(1). clarify that a request pursuant to § 1006.6(c)(1).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76827

prohibition in proposed § 1006.14(h)(1). § 1006.14(h)(1) does not contain a a debt collector using an address or a Specifically, proposed § 1006.14(h)(2)(i) writing requirement. A group of telephone number that the consumer provided that, notwithstanding the consumer advocates requested that, in previously requested the debt collector prohibition in § 1006.14(h)(1), if a order to protect consumers who have not use, the debt collector may respond consumer opts out in writing of opted out of a workplace once to that consumer-initiated receiving electronic communications communication medium, the Bureau communication. One industry from a debt collector, a debt collector clarify that the exception under commenter supported this proposed may reply once to confirm the proposed § 1006.14(h)(2)(i) does not exclusion, explaining that it makes consumer’s request to opt out, provided apply if a debt collector knows or sense to allow a business to respond to that the reply contains no information should know that the written opt-out a consumer-initiated communication other than a statement confirming the request came from a workplace- using the same medium used by the consumer’s request. And proposed provided communication channel, such consumer, even in circumstances where § 1006.14(h)(2)(ii) provided that, if a as an employer-provided email the consumer had previously chosen to consumer initiates contact with a debt address.478 opt out from that communication collector using an address or a In response to these comments, the medium. Two trade group commenters telephone number that the consumer Bureau is finalizing § 1006.14(h)(2)(i) as suggested that, if a consumer contacts a previously requested the debt collector proposed, with certain clarifications and debt collector using a medium that the not use, the debt collector may respond revisions consistent with final consumer requested the debt collector once to that consumer-initiated § 1006.14(h)(1). The Bureau is striking not use, the consumer should be communication. The Bureau proposed the reference to ‘‘in writing’’ to clarify deemed to have waived the protections § 1006.14(h)(2) because a single that a person’s request to opt out of under proposed § 1006.14(h)(1). One communication from a debt collector of receiving electronic communications consumer commenter stated that the the types described likely would not from a debt collector need not be in proposed exclusion for consumer- have the natural consequence of writing.479 Relatedly, consistent with initiated communications should be harassing, oppressing, or abusing the the permission for a debt collector to modified to exclude employer-provided consumer within the meaning of FDCPA reply once, a debt collector may send an communication media, and a group of section 806.477 One industry commenter electronic confirmation of the person’s consumer advocates urged the Bureau to supported the two proposed exceptions request to opt out. The Bureau believes exclude addresses and telephone as helpful to both consumers and debt that a single electronic communication numbers that a debt collector knows or collectors and described them as from a debt collector to confirm a should know are employer-provided, designed to facilitate communications person’s request to opt out of receiving unless the debt collector confirms with that are reasonable under the electronic communications from a debt the consumer that it is permissible to circumstances. For the reasons collector likely would not have the use them again. discussed below, the Bureau is natural consequence of harassing, The Bureau is finalizing finalizing § 1006.14(h)(2)(i) and (ii) as oppressing, or abusing the person § 1006.14(h)(2)(ii) largely as proposed, proposed, with certain clarifications, within the meaning of FDCPA section with certain clarifications in response to and, in response to comments, is 806. As finalized, § 1006.14(h)(2)(i) also comments and revisions consistent with adopting an additional exception under provides that the electronic final § 1006.14(h)(1). As suggested by the commenter above, and consistent § 1006.14(h)(2)(iii) for legally required confirmation may state that the debt with new comment 6(b)(1)–2, the communication media. collector will honor the person’s request. Accordingly, final Bureau is revising § 1006.14(h)(2)(ii) to 14(h)(2)(i) § 1006.14(h)(2)(i) provides that, permit a debt collector to respond once Proposed § 1006.14(h)(2)(i) provided notwithstanding the prohibition in through the same medium of that, notwithstanding the prohibition in § 1006.14(h)(1), if a person opts out of communication used by the person. The § 1006.14(h)(1), if a consumer opts out receiving electronic communications Bureau determines that a single in writing of receiving electronic from a debt collector, a debt collector communication from a debt collector in communications from a debt collector, a may send an electronic confirmation of response to a communication initiated debt collector may reply once to confirm the person’s request to opt out, provided by a person using that medium of communication likely would not have the consumer’s request to opt out, that the electronic confirmation the natural consequence of harassing, provided that the reply contains no contains no information other than a oppressing, or abusing the person information other than a statement statement confirming the person’s within the meaning of FDCPA section confirming the consumer’s request. One request and that the debt collector will 806. The Bureau concludes this is the industry commenter explained that it is honor it. case even with respect to employer- fairly common for businesses to send a 14(h)(2)(ii) provided email addresses because, as consumer who opts out of email explained in the section-by-section communication a confirmation message Proposed § 1006.14(h)(2)(ii) provided analysis of § 1006.6(d)(4)(i), consumers to indicate that the consumer’s request that, if a consumer initiates contact with are generally better positioned than debt has been honored; the commenter stated 478 For special rules regarding employer-provided collectors to determine if third parties that debt collectors should be able to email addresses, see § 1006.22(f)(3) and its have access to a particular email continue this practice. Other industry associated commentary. account used by a consumer, whether commenters requested that the Bureau 479 As discussed in the section-by-section analysis personal or employer provided.480 clarify the reference to a consumer’s of § 1006.6(e), the final rule requires a debt collector written opt-out request in proposed to provide, in each electronic communication, a Accordingly, final § 1006.14(h)(2)(ii) clear and conspicuous statement describing a § 1006.14(h)(1)(i), given that proposed provides that, notwithstanding the reasonable and simple method by which the prohibition in § 1006.14(h)(1), if a consumer can opt out of further electronic 477 Proposed § 1006.14(h)(2) also is consistent communications or attempts to communicate by the person initiates contact with a debt with the regulations implementing the CAN–SPAM debt collector to that address or telephone number. Act, which permit senders to send a reply Nothing in § 1006.6(e) prohibits a debt collector 480 See the section-by-section analysis of electronic message. See 16 CFR 316.5. from accepting an opt-out request made orally. § 1006.6(d)(4)(i).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76828 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

collector using a medium of connection with the collection of any § 1006.18(c) restated FDCPA section communication that the person debt through a medium of 807’s examples of false, deceptive, or previously requested the debt collector communication that the person has misleading collection means.484 not use, the debt collector may respond requested the debt collector not use to Proposed § 1006.18(d) restated the once through the same medium of communicate with the person. For catch-all prohibition against false communication used by the person. example, assume that a debt collector representations or deceptive means as who is also a mortgage servicer subject described in FDCPA section 807(10). 14(h)(2)(iii) to the periodic statement requirement Proposed § 1006.18(e) addressed the Proposed § 1006.14(h)(2) did not for residential mortgage loans under disclosures required under FDCPA include an exception for legally Regulation Z, 12 CFR 1026.41, is section 807(11). Finally, proposed required communications; however, the engaging in debt collection § 1006.18(f) addressed the use of Bureau requested comment on whether communications with a person about assumed names by debt collectors’ there are specific laws that require the person’s residential mortgage loan. employees, and proposed § 1006.18(g) communication with a consumer The person tells the debt collector to addressed misrepresentations of through a specific medium, and if so, stop mailing letters to the person, and meaningful attorney involvement in whether additional clarification is the person has not consented to receive debt collection litigation. needed regarding the delivery of legally statements electronically in accordance A number of individual consumer required communications through a with 12 CFR 1026.41(c). Although the commenters asked the Bureau to specific medium of communication person has requested that the debt prohibit specific examples of false required by applicable law if the collector not use mail to communicate statements that debt collectors had consumer has requested that the debt with the person, § 1006.14(h)(2)(iii) made to the commenters, such as claims collector not use that medium to permits the debt collector to mail the that the consumer would be deported or communicate with the consumer. Two person periodic statements, because the arrested for failing to pay a debt. While industry commenters explained that periodic statements are required by the final rule does not enumerate court orders as well as certain Federal applicable law. additional specific false statements, the and State laws, including State laws Bureau notes that § 1006.18’s general relating to service of process and Section 1006.18 False, Deceptive, or prohibition on any false, deceptive, or contracts, can require communication Misleading Representations or Means misleading representation or means in through a specific medium that could FDCPA section 807 generally connection with the collection of any contradict a consumer’s request that a prohibits a debt collector from using any debt prohibits the false statements debt collector not use that false, deceptive, or misleading described by commenters. communication medium, including, for representations or means in connection The Bureau also received two example, various notices under State with the collection of any debt and lists overarching comments regarding laws that are required to be mailed and 16 non-exhaustive examples of such proposed § 1006.18. One industry in some cases specifically by first-class prohibited conduct.481 The Bureau commenter asked the Bureau to clarify or certified mail. These commenters proposed § 1006.18 to implement that a debt collector who makes requested the Bureau clarify that FDCPA section 807.482 Proposed immaterial false statements orally does compliance with a conflicting law and § 1006.18 generally restated the statute not violate § 1006.18.485 This or court order serve as a safe harbor or with only minor wording changes for commenter suggested that the Bureau defense to a claim under the FDCPA. clarity, except for certain organizational could develop a warning letter template Another industry commenter changes and interpretations in proposed that consumers could send to a debt specifically requested that the Bureau § 1006.18(e) through (g). collector to clarify any potential clarify how a debt collector who is also The Bureau proposed to organize misstatements before suing the debt a mortgage servicer could comply with § 1006.18 by grouping the 16 non- collector for violating the FDCPA’s the periodic statement requirement for exhaustive examples of prohibited false prohibition on false representations. residential mortgage loans under or misleading representations in FDCPA This commenter further suggested that Regulation Z. section 807 into categories of related the Bureau provide a list of specific In light of these comments, the conduct. Specifically, the Bureau statements that debt collectors could use Bureau is adopting new proposed § 1006.18(a) to implement the to inform consumers of the credit § 1006.14(h)(2)(iii), which provides that, general prohibition in FDCPA section reporting status of their debts or of the notwithstanding the prohibition in 807 against debt collectors using any effect of paying their debts without § 1006.14(h)(1), if otherwise required by false, deceptive, or misleading violating the FDCPA’s prohibition on applicable law, a debt collector may representation or means in connection false representations. communicate or attempt to with the collection of any debt. The Bureau declines to adopt these communicate with a person in Proposed § 1006.18(b) restated FDCPA suggestions. The FDCPA does not connection with the collection of any section 807’s examples of false, qualify the prohibition on false, debt through a medium of deceptive, or misleading deceptive, or misleading communication that the person has representations.483 Proposed representations, and the Bureau did not requested the debt collector not use to propose to categorically interpret certain communicate with the person. 481 15 U.S.C. 1692e. The Bureau is also adopting new 482 See 84 FR 23274, 23322–24 (May 21, 2019). consistent with the statutory language in FDCPA comment 14(h)(2)–1 to provide an 483 Proposed § 1006.18(b)(1)(i) through (viii) section 807(2) was not intended to suggest that the would have implemented, respectively, paragraphs Bureau would not regard implied false example illustrating the exception (1), (16), (3), (7), (6), (12), (13), and (15) of FDCPA representations as violations of FDCPA section 807 adopted under § 1006.14(h)(2)(iii). New section 807, and proposed § 1006.18(b)(2) would or 807(2) or proposed § 1006.18(b)(2). comment 14(h)(2)–1 provides that, have implemented FDCPA section 807(2). The 484 Proposed § 1006.18(c)(1) through (4) would under § 1006.14(h)(2)(iii), if otherwise Bureau explained that restating the statutory have implemented, respectively, paragraphs (5), (8), required by applicable law, a debt language was not intended to suggest any particular (9), and (14) of FDCPA section 807. interpretation of that language. For example, the 485 Other commenters addressed specific collector may communicate or attempt omission of the words ‘‘or imply’’ from the provisions within proposed § 1006.18, and these to communicate with a person in introductory language to proposed § 1006.18(b)(2) comments are discussed below.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76829

types or methods of statements as to communicate with consumers using debt collector makes a false compliant with § 1006.18. A consumer’s social media, debt collectors do not representation or implication if the debt understanding of a statement generally clearly indicate their identity and the collector does not disclose his or her depends both on the statement itself and fact that they are collecting a debt, identity as a debt collector when making on the facts and circumstances consumers will not understand that they a friend or connection request on social surrounding the statement. Similarly, are communicating with a debt collector media. although the Bureau encourages and will be vulnerable to deceptive Second, the Bureau is including an communication between consumers and conduct. For example, commenters example to clarify that a debt collector debt collectors, the Bureau did not highlighted concerns with debt using a social media account for the propose and does not support collectors submitting a Facebook ‘‘friend purpose of engaging with third parties conditioning a consumer’s access to the request’’ or a LinkedIn ‘‘connection’’ to obtain location information about a judicial system on the consumer while omitting information about the consumer must use a profile that sending a warning letter to a debt debt collector’s true purpose, in order to accurately identifies the debt collector’s collector. Finally, the Bureau is not engage in collection communications or individual name. Specifically, comment creating safe harbor statements to obtain information about consumers. 18(d)–1.ii provides an example of a debt regarding credit reporting. The Bureau A group of State Attorneys General collector who sends a private concludes that safe harbors for general stated that all debt collection communication to a friend or coworker statements about credit reporting are communications sent using social media of the consumer on a social media unnecessary for simple statements about should be accompanied by a notice that platform for the purpose of obtaining a debt collector’s actions, and safe the purpose of the communication is to location information. The comment harbors may not be accurate or effective collect a debt.487 Similarly, Federal states that, pursuant to § 1006.10(b)(1), for complicated statements about the government agency staff indicated in its the debt collector must identify himself effects of paying a debt on a consumer’s comment that the agency has initiated or herself individually by name, and credit report, credit score, enforcement actions against debt that, pursuant to § 1006.18(d), the debt creditworthiness, or likelihood of collectors for using false pretenses to collector must communicate using a receiving credit because these effects engage consumers in conversation profile that accurately identifies the depend on the facts and circumstances through social media. debt collector’s individual name. To of a particular case.486 The Bureau recognizes that there are clarify that this comment is not For these reasons, and pursuant to its unique consumer concerns presented by intended to prohibit the use of an authority under FDCPA section 814(d) social media interactions with debt otherwise permissible assumed name, to prescribe rules with respect to the collectors, whether through direct the comment includes a cross-reference collection of debts by debt collectors messaging or connections generally. To to § 1006.18(f). The comment also states and to implement and interpret FDCPA clarify the application of the final rule that the debt collector must comply section 807, the Bureau is finalizing to the type of conduct described by with the other applicable requirements § 1006.18 largely as proposed, except commenters, the Bureau is adding of §§ 1006.6(d)(1), 1006.10, and with respect to the provisions proposed comment 18(d)–1. Comment 18(d)–1 1006.22(f)(4) when communicating with in § 1006.18(d) through (g) as discussed restates the general rule of § 1006.18(d) third parties. below. and provides two examples. Because the use of social media by First, given the purpose of social debt collectors is a relatively new 18(d) False Representations or media platforms marketed for social or practice, the Bureau intends to monitor Deceptive Means professional networking purposes, such closely developments in this space. The FDCPA section 807(10) prohibits debt as Facebook or LinkedIn, a consumer collectors from using any false who receives a ‘‘friend’’ or ‘‘connection’’ Bureau also emphasizes that the general representation or deceptive means to request on such a platform would take prohibition on false, deceptive, or collect or attempt to collect any debt or away from the request that the requester misleading conduct with any person to obtain information concerning a is interested in a social or professional may prohibit social media activities that consumer. As noted above, proposed networking relationship. This consumer are not specifically discussed in § 1006.18(d) restated this catch-all takeaway would be false if the request comment 18(d)–1. prohibition. The Bureau is finalizing is from a debt collector in connection 18(e) Disclosures Required § 1006.18(d) as proposed but, as with the collection of a debt, and this The Bureau proposed § 1006.18(e) to discussed below, is adding new false claim may cause the consumer to implement FDCPA section 807(11), comment 18(d)–1 to address feedback accept a request that the consumer received regarding the possibility of otherwise would not have accepted. which requires debt collectors to debt collectors employing deceptive Such deceptive means of engaging with disclose in their initial communications means to collect debts using social the consumer violate § 1006.18(d). To with consumers that they are attempting media. address this, comment 18(d)–1.i to collect a debt and that any The Bureau received a number of provides an example of a debt collector information obtained will be used for comments from government who sends a private message to a that purpose, and to disclose in their commenters and others expressing consumer, in connection with the subsequent communications with concern about the possibility of collection of a debt, requesting to be consumers that the communication is deception when debt collectors use added as one of the consumer’s contacts from a debt collector, except in a formal social media to collect debts. The on a social media platform marketed for pleading made in connection with a commenters explained that if, when social or professional networking legal action (the ‘‘mini-Miranda 488 debt collectors communicate or attempt purposes. The comment explains that a disclosure’’).

486 See Bureau of Consumer Fin. Prot., CFPB 487 Some commenters requested that the Bureau 488 15 U.S.C. 1692e(11). Proposed § 1006.18(e)(1) Bulletin 2013–08, Fair Debt Collection Practices Act restrict debt collectors from sending private direct addressed initial communications, proposed and the Dodd-Frank Act (July 10, 2013), https:// messages to consumers on social media platforms. § 1006.18(e)(2) addressed subsequent files.consumerfinance.gov/f/201307_cfpb_bulletin_ Those comments are discussed in the section-by- communications, and proposed § 1006.18(e)(3) collections-consumer-credit.pdf. section analysis of § 1006.22(f)(4). provided an exception for legal pleadings.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76830 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Proposed comment 18(e)(1)–1 the debt collector is in the debt in the section-by-section analysis of described the circumstances in which collection business, but is not a final § 1006.2(j), the limited-content debt collectors would be required to communication. The Bureau does not message identifies a voicemail message provide disclosures in initial determine, however, that caller ID can that debt collectors can leave for communications under proposed never constitute a communication consumers without conveying § 1008.18(e)(1). Proposed comment because caller ID systems might convey information about a debt—and therefore 18(e)(1)–1 specified that a debt collector information regarding a debt. communicating—under the final rule. must provide the disclosures in the debt This commenter also asked the Final § 1006.2(j) does not attempt to collector’s initial communication with Bureau to clarify which define the exclusive means by which the consumer, regardless of whether that communications in a series of email or debt collectors would not convey initial communication is written or oral, text messages are the ‘‘subsequent information about a debt. Requiring the and regardless of whether the debt communications’’ for purposes of mini-Miranda disclosure in every collector or the consumer initiated the § 1006.18(e)(2), such that a debt voicemail other than a limited-content communication. Proposed comment collector must again disclose that the message would conflict with the 18(e)(1)–1 also provided an example of communication is from a debt collector. FDCPA’s definition of communication the rule regarding required disclosures The Bureau currently lacks information by treating all such messages as during initial communications. showing that the meaning of subsequent communications even if they do not Proposed comment 18(e)–1 provided communication in FDCPA section convey information regarding a debt to general commentary to explain how the 807(11) is a source of serious harm to any person. disclosure requirements in proposed consumers or burden to debt collectors. Several commenters addressed § 1006.18(e) would interact with the Moreover, the Bureau believes that a language access requirements. Most of proposal’s limited-content message, a highly prescriptive approach that these comments addressed non-English message that was not a communication attempts to define when the ‘‘initial’’ language translations of the validation under proposed § 1006.2(d). communication ends and a notice in proposed § 1006.34. These For the reasons discussed below, the ‘‘subsequent’’ communication begins for comments included recommendations Bureau is finalizing § 1006.18(e) largely all communication media would be too that the Bureau include a non-English as proposed, with minor changes for rigid to accommodate the various forms language mini-Miranda disclosure on clarity, and is adopting new that communications between debt the validation notice. As discussed in § 1006.18(e)(4) regarding translated collectors and consumers might take. the section-by-section analysis of disclosures. On one hand, communications that § 1006.34, the Bureau intends to finalize The Bureau received a few comments occur in different media, such as an certain provisions of the proposal in a on the proposed implementation of the email message followed by a text disclosure-focused final rule addressing mini-Miranda disclosure requirement. A message, or communications that have the validation notice and will respond trade group commenter asked the no inherent connection between them, to commenters’ suggestions regarding Bureau to allow debt collectors to such as two letters, seem to be exactly accessibility of the mini-Miranda modify the mini-Miranda disclosure in the kind of ‘‘subsequent disclosures on the validation notice as the bankruptcy context to remove the communications’’ where a new part of that rulemaking. However, the reference to the collection of a debt and disclosure would further the purposes Bureau is adopting a requirement that to the use of any information for debt of the FDCPA section 807(11) and final debt collectors make the disclosures collection purposes. This commenter § 1006.18(e)(2). On the other hand, some required by § 1006.18(e)(1) and (2) in stated that such language could be communications, such as a webchat the same language or languages used for construed as an attempt to collect the session, may be closer to individual the rest of the communication in which debt in violation of the automatic stay telephone calls where new disclosures the disclosures are conveyed. provisions of the bankruptcy code. The throughout the conversation would Consumers who are unable to Bureau declines to adopt a specialized likely be unnecessary.489 Other communicate in English would benefit bankruptcy version of the mini-Miranda communications exist between these from receiving translated versions of the disclosure. Removing a reference to the examples and might allow for several mini-Miranda disclosure. At the same collection of a debt and to the use of any reasonable interpretations of when a time, however, the Bureau determines information for debt collection purposes subsequent communication occurs. that requiring debt collectors to identify would functionally eliminate the mini- Given the diversity of communications such consumers and provide accurate Miranda that Congress required debt and the Bureau’s lack of information, translations in the myriad languages collectors to provide in FDCPA section the Bureau is finalizing § 1006.18(e)(2) that consumers speak may impose a 807(11). as proposed. significant burden on debt collectors. If One industry commenter asked the Consumer advocates urged the Bureau a debt collector chooses to communicate Bureau to clarify that caller ID that to require the mini-Miranda disclosure with a consumer in a non-English reveals a debt collector’s business name for any voicemail message that deviates language, however, this burden is does not constitute the initial from the content required or permitted reduced. Such a debt collector will have communication with a consumer under in a limited-content message, as defined already identified the consumer’s § 1006.18(e)(1). The Bureau believes that in § 1006.2(j). The Bureau declines to language preference and exhibited a disclosure of a debt collector’s business adopt such a requirement. As explained willingness to communicate in that name does not automatically convey language. In those circumstances, information regarding a debt such that 489 Comment 6(b)(1)–2 states that, if a consumer requiring a debt collector who a communication, as defined in final initiates a communication with a debt collector at communicates in a non-English a time or from a place that the consumer previously § 1006.2(d), has occurred. As discussed designated as inconvenient, the debt collector may language to provide the disclosures in in the section-by-section analysis of respond once at that time or place through the same that language would decrease the risk of final § 1006.2(j), the final rule defines a medium of communication used by the consumer. deception and help ensure that the message, the limited-content message, Depending on the circumstances, such a reply by disclosures are effective for more a debt collector may not constitute a subsequent that includes a business name for the communication and therefore new disclosures consumers. Accordingly, final debt collector that does not indicate that would be unnecessary. § 1006.18(e)(4) provides that a debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76831

collector must make the disclosures noted by commenters. Moreover, as the readily ascertain the employee’s required by § 1006.18(e)(1) and (2) in FTC explained, the information debt identity. the same language or languages used for collectors would need to disclose to The Bureau requested comment on the rest of the communication in which avoid deception depends on the the use of assumed names by debt the debt collector conveyed the circumstances. Indeed, even in the collectors’ employees in general, as well disclosures. abstract, commenters suggested slightly as on whether and how employers can Finally, the Bureau requested different disclosures, with two readily identify their employees who are comment on whether additional commenters supporting the FTC’s using assumed names. One industry clarification regarding false or disclosures and several others offering commenter supported the proposal misleading representations would be their own alternative language. because the use of assumed names helpful in the decedent debt context, or Accordingly, the Bureau declines to would help ensure the safety of the whether to require any affirmative require in the final rule affirmative commenter’s employees. A trade group disclosures when debt collectors disclosures in the decedent debt commenter asked whether proposed communicate in connection with the context. § 1006.18(f) would require an assumed collection of a debt owed by a deceased For the reasons discussed above and name to be linked to a specific consumer. Although the Bureau did not pursuant to its authority to implement individual, or if it could be used in propose specific rules regarding and interpret FDCPA section 807(11), other ways, such as by linking certain deception in the decedent debt context, the Bureau is finalizing § 1006.18(e) assumed names to certain letters mailed the Bureau noted that the FTC largely as proposed, with minor to consumers. expressed concern in its Policy revisions for clarity, and is adopting Consumer advocates opposed the use Statement on Decedent Debt that, even new § 1006.18(e)(4) regarding translated of assumed names by debt collectors’ absent explicit misrepresentations, a disclosures. Final § 1006.18(e)(4) employees. These commenters argued debt collector might violate FDCPA provides that a debt collector must make that assumed names are inconsistent section 807 by communicating with the disclosures required by § 1006.18(e) with FDCPA section 806(6)’s such individuals in a manner that in the same language or languages used prohibition on the placement of conveys the misleading impression that for the rest of the communication in telephone calls without meaningful the individual is personally liable for which the disclosures are conveyed. disclosure of the caller’s identity. These the deceased consumer’s debts, or that Any translation of the disclosures must commenters further argued that the debt collector could seek assets be complete and accurate. The Bureau is permitting assumed names would outside of the deceased consumer’s also adopting new comment 18(e)(4)–1, enable debt collectors to escape estate to satisfy the consumer’s debt. which provides an illustrative example. accountability for abusing consumers by concealing their identities. If the Bureau The FTC’s Policy Statement suggested 18(f) Assumed Names two possible disclosures that debt were to allow assumed names, these collectors generally could use to avoid Proposed § 1006.18(f) stated that commenters stated that the Bureau must deceiving individuals who are nothing in § 1006.18 prohibits a debt develop a Federal database of aliases, attempting to resolve the financial collector’s employee from using an with one alias per employee and no affairs of an estate about their liability assumed name when communicating or duplicate aliases within the same for the decedent’s debts.490 attempting to communicate with a company, among other requirements, so Several commenters addressed these person, provided that the employee uses that consumers could look up the names issues. Two consumer advocates urged the assumed name consistently and that of any debt collector’s employees. the Bureau to require affirmative the employer can readily identify the The Bureau is finalizing § 1006.18(f) disclosures of non-liability. Several employee even if the employee is using as proposed with additional clarifying industry commenters noted that they the assumed name. For the reasons commentary. As explained in the affirmatively disclose non-liability and discussed below, the Bureau is proposal, debt collectors’ employees recommended that the Bureau adopt finalizing § 1006.18(f) as proposed, with may use assumed names for many similar disclosures. One trade group additional clarifying commentary. legitimate reasons, including for safety As the Bureau explained in the commenter supported the creation of and efficiency, and the Bureau does not proposal, debt collectors may instruct or safe harbor language that debt collectors conclude that assumed names are permit their employees to use assumed could use to avoid deceiving consumers. inherently deceptive. The use of names when interacting with consumers Another trade group commenter assumed names is consistent with for a variety of reasons. For example, requested certain exceptions from any accountability for debt collectors, as some employees may have privacy or long as the debt collector can connect required disclosure, such as for safety concerns about revealing their any assumed name to an employee’s communications with attorneys. true name and employer to a potentially The Bureau declines to adopt any real identity. The Bureau’s creation of a large number of consumers or to additional clarifications or affirmative register of assumed names used by debt particular consumers. As the Bureau disclosures. The need for required collectors’ employees is outside the explained, from a consumer’s disclosures is diminished by the lack of scope of this rule, and the Bureau does perspective, it may not be relevant evidence of deception regarding not believe that such a requirement is whether employees use true names or decedent debt, as noted in the proposal, necessary or warranted. assumed names, provided that the name In response to a trade group and by the widespread debt collector used does not mislead the consumer commenter’s question about whether an practice of disclosing non-liability, as about the debt at issue and who is assumed name must be linked to a 490 FTC Policy Statement on Decedent Debt, supra attempting to collect it. The Bureau also specific employee, the Bureau finds that note 157, at 44922. The FTC’s suggested disclosures noted that the FTC previously issued any system of managing assumed names were: ‘‘(1) That the debt collector is seeking guidance stating that a debt collector’s must ensure that the employee uses the payment from the assets in the decedent’s estate; employee does not violate the FDCPA assumed name consistently and that the and (2) [that] the individual could not be required to use the individual’s assets or assets the by using an assumed name if the employer can readily identify the individual owned jointly with the decedent to pay employee uses the assumed name employee even if the employee is using the decedent’s debt.’’ Id. consistently and the debt collector can the assumed name. The Bureau is

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76832 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

adding comment 18(f)–1 to clarify that specific context of debt collection involvement standard through one way of doing so is for an employer litigation submissions.492 rulemaking, because the standard is not to require an employee to use the same Proposed § 1006.18(g) would have found in the FDCPA and is found only assumed name when communicating or provided a safe harbor for attorneys and in case law.493 These commenters also attempting to communicate with any law firms against claims asserting lack stated that the proposed standard would person, and to prohibit any other of meaningful attorney involvement in improperly infringe on the practice of employee from using the same assumed debt collection litigation materials law, which, they said, has historically name. But the Bureau does not believe signed by the attorney and submitted to been regulated by the judicial branch a one-to-one link is the only way for an the court, provided that the attorneys and State governments and would employer to comply with the final rule. met the requirements in proposed undermine the attorney-client privilege The Bureau anticipates, however, that a § 1006.18(g). Proposed § 1006.18(g) and work-product doctrines. A member debt collector who permits many provided that an attorney has been of Congress also opposed the proposed employees to use the same assumed meaningfully involved in the meaningful attorney involvement preparation of debt collection litigation name, e.g., for a specific letter standard on these grounds. Finally, debt submissions if the attorney: (1) Drafts or campaign, would be unable to readily collection attorneys stated that the reviews the pleading, written motion, or identify any employee communicating proposed standard would not provide other paper; and (2) personally reviews or attempting to communicate with any clarity but would instead lead to information supporting the submission person. litigation, which would necessarily and determines, to the best of the result in sharing confidential attorney For the reasons discussed above, the attorney’s knowledge, information, and work product. A few of these Bureau is finalizing § 1006.18(f) largely belief, that, as applicable: The claims, commenters stated that they had as proposed. Final § 1006.18(f) provides defenses, and other legal contentions are considered alternatives to the Bureau’s that § 1006.18 does not prohibit a debt warranted by existing law; the factual proposal and found that none of them collector’s employee from using an contentions have evidentiary support; were workable. assumed name when communicating or and the denials of factual contentions Consumer advocates stated that the attempting to communicate with a are warranted on the evidence or, if proposed meaningful attorney person, provided that the employee uses specifically so identified, are reasonably involvement standard was too lenient the assumed name consistently and that based on belief or lack of information. and would sanction debt collection the debt collector can readily identify The Bureau received a large number attorney practices that these any employee using an assumed name. of comments on the proposed commenters believe to be problematic. New comment 18(f)–1 clarifies that a meaningful attorney involvement safe The commenters expressed the opinion debt collector may use any method of harbor from a variety of commenters, that the proposed standard was more managing assumed names that enables almost all of whom opposed the lenient than some meaningful attorney the debt collector to determine the true proposal. As discussed below, the Bureau has decided after considering involvement standards set forth in the identity of any employee using an Bureau’s past enforcement work, State assumed name. For example, a debt the comments not to finalize the proposed provision regarding enforcement work, and State laws. Some collector may require an employee to United States Senators also opposed the use the same assumed name when meaningful attorney involvement. While some debt collectors supported proposed meaningful attorney communicating or attempting to involvement standard for these reasons. communicate with any person and may proposed § 1006.18(g), other industry commenters—particularly debt Consumer advocates additionally stated prohibit any other employee from using that the Bureau did not describe a safe the same assumed name. collection attorneys and associations thereof—opposed it. These commenters harbor for meaningful attorney Proposed Provision Not Finalized stated that the meaningful attorney involvement in its SBREFA Outline and involvement case law discussed above asserted that the proposed provision FDCPA section 807 contains certain is misguided because FDCPA section therefore harmed the integrity of the provisions designed to protect 807(3) prohibits only the false Bureau’s rulemaking process. These consumers from false, deceptive, or representation that any communication commenters recommended that the misleading representations made by, or is from an attorney and, therefore, any Bureau propose a meaningful attorney means employed by, attorneys in debt communication that is, in fact, from an involvement rule, as opposed to safe collection litigation. FDCPA section attorney does not run afoul of that harbor, incorporating requirements set 807(3) prohibits the false representation section. These commenters also stated forth in Bureau enforcement actions. or implication that any individual is an that the FDCPA does not authorize the Having considered all of the attorney or that any communication is Bureau to adopt the meaningful attorney comments on the issue that it received, from an attorney. In addition, debt the Bureau declines to finalize the collection communications sent under 492 See Bock v. Pressler & Pressler, 30 F. Supp. proposed meaningful attorney an attorney’s name may violate FDCPA 3d 283, 303 (D.N.J. 2014) (‘‘The claimed involvement safe harbor.494 section 807(10) if the attorney was not misrepresentation here does not relate to the ultimate veracity of the numbered factual meaningfully involved in the allegations of the complaint; it concerns the 493 A few of these commenters additionally preparation of the communication.491 veracity of the implied representation that an argued that Dodd-Frank Act section 1027(e)(1) The meaningful attorney involvement attorney was meaningfully involved in the precludes the Bureau from regulating the practice case law also has been applied in the preparation of the complaint. If, in fact, the attorney of law by debt collection attorneys. who signed the complaint is not involved and 494 The Bureau disagrees with commenter familiar with the case against the debtor, then the assertions that the absence of a meaningful attorney 491 See, e.g., Nielsen v. Dickerson, 307 F.3d 623, debtor has been unfairly misled and deceived involvement safe harbor from the Bureau’s SBREFA 635 (7th Cir. 2002); Clomon, 988 F.2d at 1320. within the meaning of the FDCPA. . . .’’), reaff’d Outline represents a shortcoming in the Bureau’s Courts have found violations of other subsections on remand, 254 F. Supp. 3d 724, 729 (D.N.J. 2017); rulemaking process. The Bureau thoroughly of FDCPA section 807 for similar conduct. See, e.g., Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. described the proposed safe harbor and the Lesher v. Law Offices of Mitchell N. Kay, PC, 650 2d 86, 100 (E.D.N.Y. 2009) (applying meaningful Bureau’s rationale for it in the proposal. The F.3d 993, 1002 (3d Cir. 2011); Avila v. Rubin, 84 involvement liability to, among other actions, filing proposed safe harbor therefore raised no concerns F.3d 222, 229 (7th Cir. 1996). of complaint in court). from an APA perspective.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76833

As the Bureau noted in the proposal, would be desirable. In that regard, the proposed provision generally mirrored under existing case law, a debt Bureau disagrees with commenter the statute, with minor wording and collection communication sent under an assertions that the FDCPA does not organizational changes for clarity. attorney’s name may violate FDCPA authorize the Bureau to adopt a Specifically, proposed § 1006.22(b) section 807(10) if the attorney was not meaningful attorney involvement provided that a debt collector ‘‘must not meaningfully involved in the standard—whether consisting of collect any amount unless such amount preparation of the communication.495 requirements or a safe harbor or both— is expressly authorized by the Further, the meaningful attorney through rulemaking.498 The Bureau agreement creating the debt or permitted involvement case law has been applied believes that the FDCPA provides it by law,’’ where the term any amount in the specific context of debt collection with ample authority to adopt a includes ‘‘any interest, fee, charge, or litigation submissions.496 The Bureau meaningful attorney involvement expense incidental to the principal intended its proposed safe harbor to standard by rule. obligation.’’ 502 provide greater clarity for all One industry commenter expressed Section 1006.22 Unfair or stakeholders as to the standards law concern about litigation risk under Unconscionable Means firms and attorneys submitting § 1006.22(b) in the context of medical pleadings, written motions, or other FDCPA section 808 prohibits the use collections in which debt collectors are papers to courts in debt collection of unfair or unconscionable means in sued due to inadvertent billing errors litigation should meet in order to be in debt collection.499 The Bureau proposed caused by healthcare providers, or due compliance with FDCPA section § 1006.22 to implement FDCPA section to failing to identify if a bankruptcy is 807(10). As noted above, however, many 808.500 Specifically, the Bureau involved. The commenter advocated for industry commenters stated that the proposed § 1006.22(a) to implement giving debt collectors fifteen days to proposed safe harbor would not provide FDCPA section 808’s general investigate and resolve disputes before the intended clarity, and some of these prohibition against unfairness and they are sued by consumers, protection commenters stated that they had § 1006.22(b) through (f)(2) to implement from liability based on reliance on considered various alternatives to the section 808’s prohibited conduct information provided by a creditor, and proposed safe harbor and found none to examples.501 These provisions largely a mechanism by which debt collectors be workable in providing clarity either. restated the statute. The Bureau report corrections caused by medical And, many consumer advocates felt that proposed § 1006.22(f)(3) and (4) to providers to the Bureau. the standards proposed were too prohibit certain conduct with respect to The Bureau declines to adopt this permissive. Because neither the the use of employer-provided email suggestion. As discussed elsewhere in proposal nor alternatives discussed in addresses and social media for debt this Notice, the Bureau appreciates that comments would provide greater clarity collection communications and the complexity of medical collections as to the meaning of meaningful § 1006.22(g) to provide a safe harbor for may result in inadvertent errors. But attorney involvement, the Bureau has information contained in certain email FDCPA section 808(1) does not contain decided not to include a safe harbor in messages. any pre-litigation dispute resolution or the final rule. The Bureau did not receive feedback correction-reporting procedures, and the The Bureau anticipates that debt about proposed § 1006.22(a), (c)(2) and Bureau did not propose such procedures collection attorneys will continue to (3), (d), or (e). The Bureau therefore does in § 1006.22(b). As such, they are face lawsuits under this legal theory. As not address them in the section-by- outside the scope of this rulemaking. the Bureau described in the proposal, section analysis below and is finalizing Accordingly, the Bureau is finalizing the legal theory underlying these them as proposed. After considering § 1006.22(b) as proposed. The Bureau lawsuits is that a debt collection feedback, the Bureau is finalizing notes that, as discussed elsewhere in attorney makes an implied false proposed § 1006.22(b), (c)(1), (f), and (g) this Notice, under FDCPA section representation, in violation of the as discussed below. Except as otherwise 813(c), debt collectors may have a bona prohibition in FDCPA section 807 discussed, the Bureau is finalizing fide error defense to civil liability if they against misleading representations, § 1006.22 to implement and interpret can show that a violation was not when the attorney submits litigation FDCPA section 808, pursuant to its intentional and resulted from a bona materials without there having been authority under FDCPA section 814(d) fide error notwithstanding the meaningful attorney involvement in the to prescribe rules with respect to the maintenance of procedures reasonably preparation of the materials. As a collection of debts by debt collectors. adapted to avoid any such error. general matter, the Bureau believes that 22(b) Collection of Unauthorized Depending on the facts and this legal theory has a valid basis in the Amounts circumstances of a particular case, this text of FDCPA section 807; 497 defense might apply in certain accordingly, the Bureau expects that the The Bureau proposed § 1006.22(b) to scenarios. law regarding violations of FDCPA implement FDCPA section 808(1). The 22(c) Postdated Payment Instruments section 807 due to lack of meaningful attorney involvement will continue to 498 The Bureau also disagrees with commenter 22(c)(1) assertions that Dodd-Frank Act section 1027(e)(1) evolve case-by-case. The Bureau will constrains the Bureau’s ability to adopt rules The Bureau proposed § 1006.22(c)(1) monitor these developments and regarding meaningful attorney involvement to implement FDCPA section 808(2), continue to assess whether a future pursuant to its FDCPA authority. See supra notes which prohibits debt collectors from rulemaking in this area to provide 115 and 116. 499 accepting from any person a check or clarity and decrease consumer harm 15 U.S.C. 1692f. 500 84 FR 23274, 23324–27 (May 21, 2019). other payment instrument postdated by 501 Section 1006.22(b) proposed to implement more than five days, unless such person 495 See supra note 491. FDCPA section 808(1), 15 U.S.C. 1692f(1); is notified in writing of the debt 496 See supra note 492. § 1006.22(c) proposed to implement FDCPA section collector’s intent to deposit such check 497 FDCPA section 807 states that ‘‘[a] debt 808(2) through (4), 15 U.S.C. 1692f(2) through (4); collector may not use any false, deceptive, or and § 1006.22(d) through (f)(2) proposed to or instrument ‘‘not more than ten nor misleading representation or means in connection implement FDCPA section 808(5) through (8), 15 with the collection of any debt.’’ U.S.C. 1692f(5) through (8). 502 84 FR 23274, 23324, 23403 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76834 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

less than three business days prior to mirrored the statute. Specifically, as symbol’’ does not include language or such deposit.’’ Proposed § 1006.22(c)(1) proposed, § 1006.22(f)(2) would have symbols that facilitate communications generally mirrored that statute, except prohibited debt collectors from using by mail, for example: Postage; language that it included the phrase ‘‘days any language or symbol, other than the such as ‘‘forwarding and address (excluding legal public holidays, debt collector’s address, on any correction requested;’’ and the United Saturdays, and Sundays)’’ in lieu of the envelope when communicating with a States Postal Service’s Intelligent Mail statutory phrase ‘‘business day.’’ 503 consumer by mail, but would have barcode. In response to proposed permitted a debt collector to use the 22(f)(3) § 1006.22(c)(1), one commenter debt collector’s business name on an explained that the proposed language envelope if the name did not indicate The Bureau proposed § 1006.22(f)(3) would require debt collectors to monitor that the debt collector was in the debt to provide that a debt collector violates State holidays, which can vary collection business.505 FDCPA section 808’s general significantly. The commenter suggested In response to proposed prohibition against unfairness, as that the language be revised to state § 1006.22(f)(2), a consumer advocate proposed to be implemented in ‘‘three days (excluding federally commenter stated that the Bureau § 1006.22(a), by communicating or recognized legal public holidays, should clarify that the provision attempting to communicate with a Saturdays and Sundays).’’ prohibits email message ‘‘from’’ or consumer using an email address that The Bureau is finalizing proposed ‘‘subject’’ lines that indicate that a the debt collector knows or should § 1006.22(c)(1) substantially as communication either is about a debt or know is provided to the consumer by proposed, with a minor modification in is from a debt collector. The Bureau the consumer’s employer, unless the response to this comment. To address declines to prohibit the inclusion of debt collector received the consumer’s potential ambiguity, final § 1006.22(c)(1) such information in email message prior direct consent to use that email contains the phrase ‘‘excluding legal ‘‘from’’ or ‘‘subject’’ lines. Although the address or the consumer had sent the public holidays identified in 5 U.S.C. Bureau’s proposal made a minor change debt collector an email from that 6103(a), Saturdays, and Sundays.’’ for clarity from the wording of FDCPA address. The Bureau proposed § 1006.22(f)(3) on the basis that a debt 22(f) Restrictions on Use of Certain section 808(8) by omitting the term ‘‘by collector who communicates or attempts Media telegram,’’ the Bureau did not propose to expand the application of FDCPA to communicate by sending an email 22(f)(1) section 808(8) beyond mail. In addition, message to a consumer’s employer- FDCPA section 808(7) prohibits a debt the commentary to final § 1006.42 provided email address generally would collector from communicating with a provides that the inclusion of some such violate FDCPA section 808 because of consumer regarding a debt by postcard. information in an email subject line is the likelihood that the consumer’s The Bureau proposed § 1006.22(f)(1) to a factor in determining whether the debt employer could access and read the implement FDCPA section 808(7). The collector has complied with message and, in turn, that the consumer proposed provision generally mirrored § 1006.42(a)(1)’s requirement to send could suffer reputational or other the statutory language.504 required disclosures in a manner that is harm.507 A consumer advocate suggested that reasonably expected to provide actual The Bureau received many comments the Bureau revise proposed notice. regarding proposed § 1006.22(f)(3) from § 1006.22(f)(1) to prohibit not only The Bureau is, however, clarifying a wide variety of commenters. Many communications, as defined in how § 1006.22(f)(2) applies in the commenters, including several § 1006.2(d), but also attempts to context of mail. In the Seventh Circuit, consumers, consumer advocates, a communicate, as defined in § 1006.2(b). the Bureau filed an amicus brief arguing group of State Attorneys General, The commenter observed that, if that, while there is no benign language Federal government agency staff, a local § 1006.22(f)(1) prohibited only exception in FDCPA section 808(8) that government agency, a commenter from communications, and if the Bureau would permit debt collectors to include an academic institution, and a number finalized the definition of limited- phrases such as ‘‘time sensitive’’ on of industry commenters generally content messages as proposed in mailed envelopes, the FDCPA permits supported proposed § 1006.22(f)(3). § 1006.2(j) as only attempts to debt collectors to include language or Some consumer advocates argued, communicate, then § 1006.22(f)(1) symbols on an envelope that facilitate however, that the Bureau should further would permit debt collectors to send making use of mail. Specifically, restrict, or even prohibit, debt limited-content messages by postcard. because FDCPA section 808(8) expressly collectors’ use of employer-provided As discussed in the section-by-section recognizes that a debt collector may email addresses. analysis of § 1006.2(j), the definition of ‘‘communicat[e] with a consumer by use By contrast, many industry limited-content message in the final rule of the mails,’’ the FDCPA permits commenters questioned the Bureau’s is limited to voicemail and cannot language and symbols that facilitate basis for proposed § 1006.22(f)(3), contain either the consumer’s name or mailing an envelope.506 The Seventh raising concerns that it was overly the consumer’s address. Under this Circuit agreed with the Bureau’s restrictive in light of the privacy definition, limited-content messages analysis. In the final rule, the Bureau is features of email and citing the potential cannot be sent by postcard. The Bureau adding comment 22(f)(2)–1, which, cost of compliance compared to lack of accordingly is finalizing § 1006.22(f)(1) consistent with the Bureau’s amicus evidence of consumer harm. Some such as proposed. brief, clarifies that, for purposes of commenters argued that the Bureau § 1006.22(f)(2), the phrase ‘‘language or should not include the provision in the 22(f)(2) final rule. For example, some industry The Bureau proposed § 1006.22(f)(2) 505 Id. to implement FDCPA section 808(8). 506 See Brief for Consumer Financial Protection 507 See 84 FR 23274, 23324–26 (May 21, 2019). The proposed provision generally Bureau as Amicus Curiae, Preston v. Midland Credit The proposal used the terms ‘‘work’’ and ‘‘non- Mgmt., Inc., 948 F.3d 772 (7th Cir. 2020) (No. 1:18– work’’ email addresses. Consistent with other cv–01532), https://files.consumerfinance.gov/f/ sections of the final rule, final § 1006.22(f)(3) 503 Id. documents/cfpb_amicus-brief_preston-v- replaces these terms with ‘‘employer-provided’’ and 504 Id. midland.pdf. ‘‘personal,’’ respectively.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00102 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76835

commenters argued that employees are commonly associated with a provider of law firm commenter argued that well aware that their employer has the personal email addresses (e.g., finalizing § 1006.22(f)(3) to include an right to view emails sent to email gmail.com).509 actual knowledge standard would make addresses within the employer-provided Notwithstanding the examples in it too difficult for consumers to establish email domain and thus are aware of the proposed comment 22(f)(3)–3, a number a violation. risks of being contacted at such of commenters, including many The Bureau appreciates that, under a addresses. Several industry commenters industry and some consumer advocate ‘‘should know’’ standard, debt collectors believed that debt collectors should be commenters, expressed concern about may have difficulty determining, for permitted to contact consumers at the ‘‘should know’’ standard, stating example, whether certain email employer-provided email addresses as that, in many cases, debt collectors may addresses are employer provided and long as consumers could opt out. be unable to easily or reliably that such uncertainty may cause some Another argued that debt collectors distinguish between employer-provided debt collectors to refrain from should be permitted to communicate or and personal email addresses. A number communicating through any email attempt to communicate using an email of industry commenters, for example, address, even if email might be address that is not obviously employer stated that whether an ‘‘.edu’’ email beneficial and preferable for at least provided unless a consumer expressly address belongs to a student or some consumers. As discussed states a desire not to be contacted at employee of an educational institution elsewhere in part V, the final rule work.508 can be ambiguous. Similarly, several clarifies the FDCPA’s application to After considering this feedback, the consumer advocate commenters electronic communication media and Bureau is finalizing proposed questioned whether debt collectors such clarity is intended, in part, to § 1006.22(f)(3) with revisions, as would be able to rely on domain name permit those consumers and debt discussed below, because the Bureau alone to distinguish personal from collectors who prefer to use such newer concludes that the provision provides employer-provided email addresses communication technologies to do so important protections for consumers. As because some consumers use free or while also establishing important discussed in the proposal, employers low-cost email accounts in connection consumer protections. often have the right to access, and may with their employment. Industry The Bureau also understands monitor, email accounts they provide to commenters explained that there concerns raised by consumer advocate employees. And the risks of harm to currently are no systems to scrub email commenters about an actual knowledge consumers from debt collectors sending addresses to determine whether they are standard. However, in light of the messages to an employer-provided employer provided and that developing difficulties identified regarding a email address are particularly high and maintaining such systems would ‘‘should know’’ standard, and because because of the risk of adverse cost the industry millions of dollars and the Bureau finds that consumers will benefit from a clear prohibition in the employment consequences, which can entail privacy risks for consumers. final rule against the use of employer- cause economic harm and exacerbate a Many industry commenters stated that provided email addresses, the Bureau is consumer’s financial distress, including the lack of clarity regarding ‘‘should finalizing § 1006.22(f)(3) to generally by making it more difficult to satisfy know’’ would impose significant costs prohibit debt collectors from outstanding financial obligations. The on debt collectors and increase litigation communicating or attempting to legislative history of the FDCPA risk, and some stated that it would communicate with a consumer by indicates an emphasis on preventing discourage debt collectors from using email altogether, even if email might sending an email to an email address such risks to a consumer’s employment potentially benefit some consumers. that the debt collector knows is from debt collection communications. Industry commenters suggested a provided to the consumer by the Final § 1006.22(f)(3) provides number of revisions to proposed consumer’s employer.510 The standard protections specific to such harms § 1006.22(f)(3) to address their concerns is consumer-specific; that is, a debt consumers may face with the use of regarding the knowledge standard. A collector does not necessarily know that employer-provided email addresses. variety of industry commenters a consumer’s email address is employer Knows-or-Should-Know Standard suggested that the Bureau should provided merely because the domain include a presumption that email name for that email address is the same Section 1006.22(f)(3) proposed, in domain names commonly associated as the domain name for an email relevant part, to prohibit debt collectors with personal accounts (e.g., gmail, address that a different consumer has from communicating or attempting to hotmail, yahoo, msn, and other similar told the debt collector is employer communicate with a consumer using an products) are personal email addresses, provided. email address that the debt collector unless the debt collector knows or has Consent and Prior Use Exceptions knows or should know is provided to reason to know that such email the consumer by the consumer’s addresses are employer provided. Other Proposed § 1006.22(f)(3) provided that employer. Proposed comment 22(f)(3)–3 industry commenters requested that the a debt collector could communicate or described the know or should know Bureau limit § 1006.22(f)(3) to situations attempt to communicate with a standard and set forth three scenarios in in which the debt collector knows an consumer using an employer-provided which a debt collector would have met email address is employer provided. email address if the debt collector had it. Proposed comment 22(f)(3)–3 also Other industry commenters asked the received directly from the consumer stated that, absent contrary information, Bureau to clarify that debt collectors are either prior consent to use that email a debt collector would not know (and not required to impute knowledge that address or an email from that email should not know) that an email address one consumer’s email address is address. Proposed comments 22(f)(3)–1 was employer provided if the domain employer provided to other consumers and –2 clarified these exceptions. name in the email address was one who are employees of the same employer. On the other hand, a 510 The Bureau notes that debt collectors remain 508 As discussed further below, many industry subject to the general prohibition on third-party commenters also expressed significant compliance consumer advocate commenter and a disclosure in § 1006.6(d)(1) and that consumers may concerns with the ‘‘should know’’ aspect of the set communication limits according to their proposed knowledge standard. 509 See 84 FR 23274, 23325 (May 21, 2019). preferences under §§ 1006.6(b)(1) and 1006.14(h).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76836 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Several industry commenters their prior consent for debt collectors to collectors need not engage in such supported the consent provision as use an employer-provided email address conduct to obtain consumer consent. proposed, but many requested that debt to provide an alternative email address And, to the extent a debt collector does collectors be able to rely on evidence of to debt collectors. Such a requirement so, the debt collector will have violated consent provided to the creditor, such does not have a basis in the FDPCA and one or more of FDCPA sections 806 as an employer-provided email address is not necessary or warranted for debt through 808 and §§ 1006.14(a), included in a loan application or an collectors to avoid a third-party 1006.18(a), and 1006.22(a). For these email recently used by a creditor.511 disclosure violation. As to the request reasons, the Bureau is finalizing One industry commenter asked that for clarification about what to do if a § 1006.22(f)(3) to provide, as proposed, debt collectors be able to rely on a consumer withdraws consent to prior consent and consumer use documented specific request by a communicate using an employer- exceptions to the general prohibition. consumer to be contacted at an provided address, the Bureau notes that For ease of compliance, however, the employer-provided email address. Other § 1006.14(h) prohibits debt collectors Bureau is finalizing the exceptions by industry commenters asked the Bureau from using that email address again.512 replacing them with a cross-reference to to clarify how the rule applies if a The Bureau finds that it is not § 1006.6(d)(4)(i) and (iii), which, as consumer withdraws consent for the necessary to limit the prior consent described above, are generally debt collector to use an employer- exception in the ways that consumer consistent with the proposed provided email address after the debt advocates suggested in light of other exceptions. collector has sent an email to that revisions to the final rule addressing For the reasons discussed above, the address. Two industry commenters consent for and prior use of particular Bureau is finalizing § 1006.22(f)(3) to recommended that consumers be email addresses. As discussed in the prohibit a debt collector from required to provide debt collectors an section-by-section analysis of communicating or attempting to alternative email address if they § 1006.6(d)(4)(i) and (iii), the procedures communicate with a consumer by withdraw their consent to be contacted described in those sections are tailored sending an email to an email address at their employer-provided address. to minimize the risk of third-party that the debt collector knows is Consumer advocate commenters disclosures, including disclosures to provided to the consumer by the generally argued that the Bureau should employers. Specifically, § 1006.6(d)(4)(i) consumer’s employer, unless the email limit how a debt collector could obtain outlines procedures based on whether address is one described in 514 a consumer’s prior consent. A number the consumer used the email address to § 1006.6(d)(4)(i) or (iii). The Bureau is of consumer advocate commenters communicate with the debt collector or adopting new comment 22(f)(3)–1 to requested that consent be provided in directly consented to the debt collector’s further clarify that a debt collector who conformity with the requirements of the use of the address. These procedures sends an email to an email address E–SIGN Act. One consumer advocate permit the consumer to assess the risk described in § 1006.6(d)(4)(i) or (iii) commenter requested that the Bureau of a third-party disclosure, including to does not violate the prohibition in prohibit debt collectors from soliciting an employer, before deciding whether to § 1006.22(f)(3), even if the debt collector employer-provided email addresses. communicate by email. Section knows the email address is employer Another consumer advocate commenter 1006.6(d)(4)(iii) outlines procedures provided. New comment 22(f)(3)–1 also requested that the Bureau narrow the based on communication by a prior debt clarifies that a debt collector who sends scope of the consent exception by only collector and limits a debt collector to an email to an email address described in § 1006.6(d)(4)(ii) complies with allowing, in some circumstances, the using email addresses that, among other § 1006.22(f)(3) because a debt collector debt collector to respond by sending a things, were obtained by a prior debt who follows § 1006.6(d)(4)(ii) does not, single follow-up email to confirm the collector under § 1006.6(d)(4)(i) or by definition, send an email to an email consumer’s consent. (ii).513 address that the debt collector knows is Regarding industry commenters’ The Bureau also declines to adopt provided by a consumer’s employer. In suggestion that prior consent cover consumer advocates’ recommendation effect, therefore, comment 22(f)(3)–1 email addresses the consumer provided to prohibit debt collectors from clarifies that a debt collector who sends to a creditor, the Bureau finds that, as soliciting employer-provided email an email to an email address described discussed in the section-by-section addresses. While the Bureau appreciates analysis of § 1006.6(d)(4), consumers in § 1006.6(d)(4) does not violate the risk that a debt collector could § 1006.22(f)(3). might not appreciate the risks of sharing engage in abusive, deceptive, or unfair an email address with a creditor at the conduct to obtain a consumer’s consent 22(f)(4) time of initiating an account to use an employer-provided email The FDCPA does not specifically relationship, when the prospect of address, a per se prohibition on address newer technologies, including defaulting on a financial obligation is soliciting a consumer’s permission social media. The Bureau proposed to remote. The Bureau also declines to would be overbroad because debt provide that certain communications require consumers who are withdrawing and communication attempts, when 512 The Bureau notes that one commenter asked made using social media, represent 511 The proposal stated that a consumer may that debt collectors be able to rely on a documented unfair or unconscionable means to consent to receiving emails from a creditor on their specific request by a consumer to be contacted at work account based on the characteristics of that an employer-provided email address. A consumer collect a debt in violation of FDCPA particular creditor; in contrast, consumers generally who specifically requested to be contacted at an section 808, as proposed to be have no ability to choose which debt collector employer-provided email address would qualify as implemented in § 1006.22(a).515 attempts to collect their debts. 84 FR 23274, 23326 prior direct consent under the final rule. Specifically, proposed § 1006.22(f)(4) (May 21, 2019). Some industry commenters 513 An additional requirement of disagreed. They stated that most contracts specify § 1006.6(d)(4)(iii) is that the consumer did not opt provided that a debt collector must not that the creditor may hire a third-party debt out of the immediately prior debt collector’s use of collector if the consumer fails to uphold the the particular email address. This requirement, 514 In light of the changes the Bureau is making agreement and that, in the commenters’ view, the when satisfied, suggests that the risk of third-party to § 1006.22(f)(3), proposed comments 22(f)(3)–1 debt collector should therefore be able to use an disclosure is low if the later debt collector uses the through –3 are no longer necessary, and the Bureau email address provided by the consumer to the email address, even if that debt collector knows the is not finalizing them. creditor. email address is employer provided. 515 See 84 FR 23274, 23326–27 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00104 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76837

communicate or attempt to a shared device. The Bureau confirms FDCPA section 808 (as implemented by communicate with a consumer in that the prohibition in § 1006.22(f)(4) § 1006.22(a)). connection with the collection of a debt applies to public-facing Private Social Media Communications through a social media platform that is communications and attempts to and Attempts To Communicate viewable by a person other than the communicate, not to private messages persons described in § 1006.6(d)(1)(i) (i.e., social media messages that cannot Although proposed § 1006.22(f)(4) through (vi) (i.e., the consumer; the be viewed by members of the general would not have prohibited private consumer’s attorney; a consumer public or a person’s social media communications or attempts to reporting agency, if otherwise permitted contacts) that might be inadvertently communicate by social media, most by law; the creditor; the creditor’s accessed by a third party.519 commenters who addressed proposed attorney; or the debt collector’s One consumer advocate commenter § 1006.22(f)(4) addressed this topic. attorney).516 Proposed comment stated that, instead of prohibiting Some industry commenters noted that 22(f)(4)–1 provided certain clarifications communications or attempts to communicating privately through social regarding the proposed prohibition. As communicate through a social media media could benefit both consumers discussed below, the Bureau is platform that is viewable by a person and debt collectors, but some also finalizing proposed § 1006.22(f)(4) with other than the persons described in indicated that they do not currently use § 1006.6(d)(1)(i) through (vi), the rule social media due to data security and revisions in response to feedback and 520 for clarity. should prohibit social media privacy concerns. A few commenters communications or attempts to noted that consumers do not provide Public-Facing Social Media communicate that are viewable by their social media contact information Communications and Attempts to anyone other than the consumer as to creditors and therefore do not expect Communicate defined in FDCPA section 803(3) (i.e., to be contacted through that channel No commenters objected to the by anyone other than the person who about financial matters, although one general concept of restricting publicly owes or is alleged to owe the debt). The industry commenter noted that viewable social media communications commenter explained that it was consumers might post about their as an unfair means of debt collection. unaware of any social media platform collection experiences in a social media that would allow for communications to forum and companies might monitor Several industry commenters supported 521 the proposed concept, as did a Federal be viewable only by the persons social media for such mentions. One government commenter, consumer described in § 1006.6(d)(1)(i) through group of consumer advocates stated that advocate commenters, and individual (vi) and nobody else. The Bureau agrees some consumers might be advantaged consumer commenters. that a debt collector’s communications by private social media Some commenters were uncertain or attempts to communicate through a communications. But this commenter, along with many consumer, consumer whether the proposal would have social media platform are unlikely to be advocate, government, and other prohibited communications or attempts limited in that way and is finalizing commenters, expressed concerns about to communicate that might be viewable § 1006.22(f)(4) without that language. such communications, as discussed by social media platform providers, One consumer advocate commenter further below. One member of Congress given that such providers were persons stated that the scope of proposed expressed particular concern regarding other than those specified in § 1006.22(f)(4) should be expanded to private social media debt collection § 1006.6(d)(1)(i) through (vi). The include not just public-facing social communications about consumers’ Bureau clarifies in the final rule that the media communications and medical debts, which, this commenter prohibition applies to communications communication attempts, but any public-facing electronic communication stated, could include consumers’ or attempts to communicate that can be protected health-care information. In viewed by members of the general or attempt to communicate, e.g., comments to a blog post, group text, or light of those concerns, some of these public or a person’s social media commenters argued that the Bureau 517 chatroom discussions. The Bureau contacts, not to messages that could should either expand § 1006.22(f)(4) to be accessible in some form by a social declines to expand the scope of § 1006.22(f)(4) in this way. The Bureau also ban private social media media platform provider but that are communications and attempts to otherwise not viewable by the general notes that, even if not specifically prohibited by § 1006.22(f)(4), any communicate or to require debt public or a person’s social media collectors to obtain prior consent 518 public-facing communication (whether contacts. directly from consumers before Similarly, one industry commenter online or otherwise) may well violate one or more other prohibitions, such as communicating privately through social believed that the proposal’s use of the 522 the prohibition against third-party media. The Bureau declines to do so word ‘‘viewable’’ would create for the reasons discussed below. compliance risk for messages communications in FDCPA section 805(b) (as implemented by inadvertently viewed by a third party on 520 A few industry commenters noted the § 1006.6(d)(1)); the prohibition against possibility of inbound private social media 516 These individuals are those with whom a debt harassing, oppressive, or abusive messages from consumers. In response to a request collector may communicate about a debt, even in conduct in FDCPA section 806 (as for clarification, the Bureau notes that nothing in the absence of an exception such as prior consent, implemented by § 1006.14(a)); and the the FDCPA or the final rule requires a debt collector without violating the FDCPA’s prohibition against to communicate using a social media platform third-party communications. See the section-by- prohibition against unfair or merely because a consumer sends the debt collector section analysis of § 1006.6(d)(1). unconscionable collection means in a message using that platform. 517 In this way, § 1006.22(f)(4) is similar to other 521 The Bureau notes that debt collectors can provisions of the FDCPA and Regulation F that 519 Other commenters argued that the Bureau respond to such posts privately, as discussed below, focus on protecting consumers from public should prohibit private social media messages and that the prohibition in § 1006.22(f)(4) applies disclosure of information regarding their debts. See because of the risks involved in sending such only to communications and attempts to FDCPA sections 806(3) (§ 1006.14(e)) and 808(7) messages, including the risk that they might be communicate in connection with the collection of and (8) (§ 1006.22(f)(1) and (2)). inadvertently accessed by third parties. Those a debt. 518 For further discussion of electronic comments are discussed in the section-by-section 522 Many commenters in support of a prior communications and access by providers, see the analysis below regarding private social media consent requirement recommended that consent be section-by-section analysis of § 1006.6(d)(4)(ii)(E). communications and attempts to communicate. Continued

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76838 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

One common area of concern among a debt collector must meet to send instructions for electronic commenters regarding private social required disclosures electronically, communications in § 1006.6(e), and the media messages was the risk of third- including that the disclosure must be limitations on use of certain party disclosures, which commenters sent in a manner that is reasonably communications media in § 1006.14(h)). observed could occur if, for example, expected to provide actual notice to the They also are subject to the FDCPA’s debt collectors accidentally sent consumer, and, with respect to the general prohibitions against unfair, messages to the wrong person (e.g., to a validation notice that is not the initial deceptive, and abusive conduct in person with a similar name as the communication, that the disclosure be sections 806 through 808 (final consumer) or if social media platform sent in accordance with section 101(c) §§ 1006.14, 1006.18, and 1006.22).526 providers accessed private of the E–SIGN Act. The Bureau notes Some consumer advocates communications for advertising or other that communications over social media recommended that consumers be able to purposes. As to sending messages to the may be less likely to reach consumers opt out of private social media wrong person, debt collectors remain and therefore, under the final rule, debt messages, among other types of subject to § 1006.6(d)(1) when collectors may be less likely to meet electronic communications, such as by communicating through social media these standards by sending validation allowing consumers to reply simply and, accordingly, should exercise notices to consumers through private with ‘‘stop.’’ Others suggested that caution to avoid violating FDCPA social media messages. consumers should be allowed to opt out section 805(b) and § 1006.6(d) by Some commenters worried about the of all social media platforms because communicating with the wrong potential for deception from private opting out of individual platforms consumer.523 For example, a debt social media messages. Consumer would be burdensome. The Bureau collector would violate FDCPA section commenters expressed concern that notes that, under the final rule, debt 805(b) and § 1006.6(d) if, as suggested in consumers would have difficulty collectors will be required to include, in one hypothetical, the debt collector verifying the identity of a debt collector any private social media message, a communicated by private social media over social media. Relatedly, a group of reasonable and simple method by which message with the wrong person because State Attorneys General, a Federal the consumer can opt out of receiving the debt collector merely identified a government commenter, and a member further messages. Consumers also will person with the same or similar name as of Congress identified risks from have the option to opt out of all social the consumer.524 As to social media potentially deceptive acts or practices, media communications, or platform providers accessing private such as ‘‘friending’’ someone in communications through a particular communications, the Bureau discusses connection with the collection of the platform.527 debt in a way that omits material this concern in § 1006.6(d)(4)(ii)(E). Coverage Accordingly, the Bureau declines to information about the debt collector’s prohibit private social media identity and motives. One member of As proposed, § 1006.22(f)(4) would communications and attempts to Congress expressed particular concern have applied only to communications or communicate. regarding this conduct in connection attempts to communicate with a Other commenters expressed concern with collection of medical debts. In consumer, as defined in FDCPA section about consumers’ ability to response to commenters’ concerns, the 803(3) and proposed § 1006.2(e) (i.e., the communicate effectively about a debt Bureau notes that the specific conduct person obligated or allegedly obligated over social media. Several consumer described above likely would violate to pay the debt). A consumer advocate advocates explained that some FDCPA section 807 and final § 1006.18’s commenter stated that the Bureau consumers would inadvertently miss prohibition against false or deceptive should broaden § 1006.22(f)(4) to apply important information, such as the representations, as discussed in the to consumers as defined in FDCPA validation notice, if it were sent using section-by-section analysis of section 805(d) and proposed § 1006.6(a) social media, due to difficulty accessing § 1006.18(d). (i.e., to the person obligated or allegedly information online or managing a high Some commenters observed that obligated to pay the debt and that number of electronic communications. consumers might find private social person’s spouse, parent (if the person is The Bureau notes that, as discussed in media communications from debt a minor), or guardian, or the executor or the section-by-section analysis of collectors unwelcome or harassing, administrator of the person’s estate), as § 1006.42, it is finalizing standards that particularly because consumers do not well as to deceased consumers. The provide social media contact commenter explained that debt express and provided directly to the debt collector information to creditors and generally collectors should not be able to post or conform with the E–SIGN Act’s consumer are not accustomed to being contacted consent provisions. See 15 U.S.C. 7001(c)(1). about financial matters in this way. provide guidance about how the time and place 523 For the reasons discussed in the section-by- While the Bureau recognizes this restrictions apply in the case of electronic section analysis of § 1006.6(d)(3), although the communications, which include private social Bureau is outlining procedures that, when followed, concern, the Bureau also notes that media messages. may provide a debt collector a safe harbor from civil private messages are subject to all of the 526 Several groups of consumer advocate liability for a third-party disclosure when sending provisions of the FDCPA and the final commenters argued that private social media emails and text messages, the Bureau is not rule, including all of the provisions messages should be subject to a frequency limit like outlining such procedures for sending private social the one the Bureau proposed in § 1006.14 with media messages. designed to empower consumers to respect to telephone calls. For the reasons discussed 524 Commenters also expressed concern that communicate with debt collectors in the in the section-by-section analysis of § 1006.14, third-party disclosures of private social media manner that they prefer (i.e., the time electronic communications, including private social messages might occur as the result of identity theft and place restrictions in FDCPA section media messages, are not subject to the telephone or a data breach; inadvertently (e.g., if the consumer 525 call frequencies in final § 1006.14(b). However, as shares a device with another person); or if 805(a) and § 1006.6(b)(1), the opt-out noted, they are subject to the general prohibition in consumers give permission to a third party. The FDCPA section 806 and final § 1006.14(a) against Bureau notes that these types of risks are present 525 One industry commenter requested that the conduct the natural consequence of which is to in any type of electronic debt collection Bureau clarify whether private messages on social harass, oppress, or abuse any person in connection communication and that debt collectors must take media platforms would be subject to time and place with the collection of a debt. See the section-by- care not to violate the general prohibition against restrictions under the FDCPA; the Bureau clarifies section analysis of § 1006.14(a) and (b). third-party disclosures in FDCPA section 805(b) that they would be. Section 1006.6, and specifically 527 See the section-by-section analyses of (§ 1006.6(d)(1)). final comments 6(b)(1)–1 and –2 and 6(b)(1)(i)–1, §§ 1006.6(e) and 1006.14(h), respectively.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00106 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76839

publicly about a deceased consumer’s 22(g) Safe Harbor Section 1006.26 Collection of Time- alleged debt on the person’s social Barred Debts media account because a debt collector’s Proposed § 1006.22(g) provided that a debt collector who communicates with Proposed § 1006.26(a) and (b) would only reason for doing so would be to have defined the terms statute of a consumer using an email address, or pressure surviving relatives to pay the limitations and time-barred debt and telephone number for text messages, debt, either to protect the deceased would have interpreted FDCPA section and follows the procedures described in consumer’s reputation or out of a sense 807 to prohibit debt collectors from of moral obligation. Other commenters § 1006.6(d)(3) does not violate suing and threatening to sue consumers raised concerns about debt collectors § 1006.22(a) by revealing in the email or to collect time-barred debts.531 In contacting persons other than text message the debt collector’s name addition, proposed § 1006.26(c), as set consumers, such as family members, by or other information indicating that the forth in the Bureau’s February 2020 social media and as discussed above, communication relates to the collection proposal,532 would have required a debt many commenters supported a broad of a debt. The procedures in proposed collector collecting a debt that the debt ban on public-facing social media § 1006.6(d)(3) were designed to ensure collector knows or should know is time communications. that a debt collector who uses a barred to disclose: (1) That the law The Bureau is finalizing particular email address or telephone limits how long the consumer can be § 1006.22(f)(4) with revisions to the number to communicate with a sued for a debt and that, because of the scope of coverage. Specifically, final consumer by email or text message does age of the debt, the debt collector will § 1006.22(f)(4) prohibits a debt collector not have a reason to anticipate that an not sue the consumer to collect it; and from communicating or attempting to unauthorized third-party disclosure may (2) if the debt collector’s right to bring communicate with a person, in occur. As the Bureau explained in the a legal action against the consumer to connection with the collection of a debt, proposal, if the proposed procedures collect the debt can be revived under through a social media platform if the work as designed, there would not be a applicable law, the fact that revival can communication or attempt to reason to anticipate that a third party occur and the circumstances in which it communicate is viewable by the general would see the debt collector’s name or can occur. The February 2020 proposal public or the person’s social media other debt-collection-related also included model language and forms contacts. The definition of person information included in a that debt collectors could use to comply includes a consumer. FDCPA section communication sent to such an email with the proposed time-barred debt and 803(3) defines a consumer as any address or telephone number. Some revival disclosures. natural person obligated or allegedly consumer advocate commenters stated The Bureau is not finalizing proposed obligated to pay any debt. As noted in that the Bureau should not finalize the § 1006.26 at this time. As noted in part the section-by-section analysis of proposed safe harbor for emails and text III, the comment period for the February § 1006.2(e), the Bureau received a messages in § 1006.22(g) because the 2020 proposal closed on August 4, 2020, number of comments regarding its commenter believed the procedures in and the Bureau is now completing its proposal to interpret the term consumer proposed § 1006.6(d)(3) were review and evaluation of all comments to include deceased natural persons. inadequate.530 received regarding proposed § 1006.26. The Bureau plans to address comments As discussed in the section-by-section received regarding that interpretation, The Bureau is finalizing § 1006.22(g) analysis of § 1006.34, the Bureau and to determine whether to finalize substantially as proposed. For the intends to issue a disclosure-focused that interpretation, as part of the reasons discussed in the section-by- final rule to address the Bureau’s Bureau’s disclosure-focused final rule. section analysis of § 1006.6(d)(3) proposed validation notice, and the For the reasons discussed above, the through (5), the Bureau believes the safe Bureau intends to address § 1006.26 at Bureau is finalizing § 1006.22(f)(4) to harbor procedures at § 1006.6(d)(3) will that time, as well. For this reason, the provide that a debt collector must not provide appropriate consumer Bureau is reserving § 1006.26. communicate or attempt to protections and that debt collectors using those procedures would not have Section 1006.30 Other Prohibited communicate with a person in Practices connection with the collection of a debt reason to anticipate a third-party through a social media platform if the disclosure would occur. If a debt The Bureau proposed in § 1006.30 communication or attempt to collector is using those procedures, the several measures designed to protect communicate is viewable by the general Bureau concludes that a safe harbor for consumers from certain harmful debt public or the person’s social media § 1006.22(a) is necessary and warranted. collection practices. Specifically, the contacts.528 The Bureau is finalizing Accordingly, the Bureau is finalizing Bureau proposed in § 1006.30(a) to proposed comment 22(f)(4)–1 with § 1006.22(g) substantially as proposed, regulate debt collectors’ furnishing revisions to conform to the text of the with technical revisions for clarity. practices under certain circumstances; final rule.529 in § 1006.30(b) to limit the transfer of content messages. As discussed in the section-by- certain debts; and in § 1006.30(c), (d), 528 As proposed, § 1006.22(f)(4) provided, in section analysis of § 1006.2(j), final § 1006.2(j) and (e) to generally restate statutory relevant part, that a debt collector must not defines a limited-content message to mean a provisions regarding allocation of communicate or attempt to communicate ‘‘by a voicemail message for a consumer. Accordingly, payments, venue, and the furnishing of social media platform that is viewable’’ by the under the final rule, it will not be possible for debt public. The Bureau is finalizing § 1006.22(f)(4) to collectors to leave limited-content messages using certain deceptive forms, respectively. provide, in relevant part, that a debt collector must social media. In light of this change, the Bureau The Bureau received no comments not communicate or attempt to communicate does not further address comments received specifically addressing proposed ‘‘through a social media platform if the regarding the use of limited-content messages in § 1006.30(e) regarding the furnishing of communication or attempt to communicate is publicly viewable social media messages. deceptive forms and is finalizing it as viewable’’ by the general public, to clarify that the 530 A few industry commenters stated that the relevant question is whether the communication or safe harbor in proposed § 1006.22(g) should be attempt to communicate is viewable, not whether expanded to include voicemails. As to voicemails, 531 84 FR 23274, 23327–29 (May 21, 2019). the platform itself is viewable. final § 1006.2(j) defines a limited-content message 532 The Bureau proposed the time-barred debt 529 Among other conforming changes, final that debt collectors can leave for consumers without disclosures in the February 2020 proposal. 85 FR comment 22(f)(4)–1 omits references to limited- communicating under the FDCPA. 12672 (Feb. 21, 2020).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00107 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76840 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

proposed.533 Accordingly, the Bureau unfair or unconscionable. The Bureau 30 days—and to sell, transfer, or place does not address § 1006.30(e) further in also proposed § 1006.30(b)(1) pursuant the debt if, pursuant to its investigation, the section-by-section analysis below. to its authority under section 1031(b) of the debt collector determines that the the Dodd-Frank Act to prescribe rules to claim is not valid. Some of these 30(a) Communication Prior To identify and prevent unfair acts or commenters noted that the FCRA Furnishing Information practices by Dodd-Frank Act covered prohibits a person from selling, Proposed § 1006.30(a) would have persons. transferring for consideration, or placing prohibited a debt collector from The Bureau received numerous for collection a debt after being notified furnishing to a consumer reporting substantive comments addressing the that a consumer reporting agency agency, as defined in section 603(f) of proposed transfer ban. Some industry identified that debt as having resulted the Fair Credit Reporting Act (FCRA),534 commenters, including creditors and from identity theft. They also noted that information regarding a debt before associations thereof, as well as the U.S. the FCRA includes provisions designed communicating with the consumer SBA Office of Advocacy, expressed to ensure that consumer reporting about the debt.535 The Bureau is not concern about the Bureau’s proposed agencies and furnishers are able to finalizing proposed § 1006.30(a) at this adoption of the transfer ban through conduct reasonable investigations of time. As discussed in the section-by- reliance on its authority under section consumers’ identity-theft claims and to section analysis of § 1006.34, the Bureau 1031(b) of the Dodd-Frank Act in prevent consumers and credit repair intends to issue a disclosure-focused addition to its FDCPA authority. These companies from abusing the FCRA’s final rule to address the Bureau’s commenters stated that use of authority identity-theft related consumer proposed validation notice, and the under section 1031(b) of the Dodd-Frank protections. Bureau intends to address proposed Act creates uncertainty and legal risk for Industry commenters also provided § 1006.30(a) at that time, as well. For creditors without increasing consumer comments seeking other modifications this reason, the Bureau is reserving protections because a ban might be and clarifications to the proposed § 1006.30(a). imputed to creditors even if they are not transfer ban. One industry commenter 30(b) Prohibition on the Sale, Transfer FDCPA debt collectors. These stated that the ban should apply to for Consideration, or Placement for commenters urged the Bureau to adopt disputed debts if the debt collector does Collection of Certain Debts the transfer ban using only its FDCPA not have access to original account-level authority. These commenters further documentation; other industry 30(b)(1) In General commented that, if the Bureau retained commenters said that the ban should The Bureau proposed in the use of its authority under section not encompass any additional debt § 1006.30(b)(1) to prohibit a debt 1031(b) of the Dodd-Frank Act, the types beyond those set forth in the collector from selling, transferring, or Bureau should take other steps to proposal. Finally, one industry placing for collection a debt if the debt provide clarity, such as explicitly commenter stated that the Bureau collector knows or should know that the excluding debt sales by creditors from should clarify that the transfer ban does debt has been paid or settled, the transfer ban, adding a safe harbor for not prohibit the return of an assignment, discharged in bankruptcy, or that an sale or transfer of accounts by creditors a file of data being sent for analytics, or identity theft report has been filed with subject to a repurchase agreement, or a file sent for ‘‘scrubbing.’’ Instead, respect to the debt (‘‘transfer ban’’).536 permitting creditors to invoke the bona commenters argued the transfer ban The Bureau proposed § 1006.30(b)(1) fide error defense in FDCPA section should apply only when the transferring pursuant to its authority under FDCPA 813(c) in the context of the transfer ban. entity intends the receiving entity to section 814(d) to prescribe rules with Some industry commenters stated that undertake collection activity for respect to the collection of debts by debt the ‘‘should know’’ aspect of the receiving payment from the debtor. collectors, and pursuant to its authority proposed ‘‘knows or should know’’ Consumer advocates suggested that to interpret FDCPA section 808 standard is unclear and argued that the the Bureau expand the transfer ban’s regarding unfair or unconscionable debt rule should reflect a ‘‘knows’’ standard, coverage in proposed § 1006.30(b)(1) to collection practices. The Bureau or, if ‘‘should know’’ is retained, encompass several additional types of proposed to prohibit the sale, transfer, include safe harbors for certain debt beyond, as proposed, debts that or placement of such debts as unfair practices. For example, some of these have been paid or settled, discharged in under FDCPA section 808 on the basis commenters stated that the rule should bankruptcy, or that are subject to an that, because consumers do not owe or provide a safe harbor for the bankruptcy identity theft report. They suggested cannot lawfully be subject to collections prong of the ban to a debt collector who that the ban also prohibit the sale, on alleged debts that have been paid or ‘‘scrubs’’ a debt against commercially transfer, or placement of time-barred settled or discharged in bankruptcy, and available databases 30 days before the debt, disputed debt, debt lacking likely do not owe alleged debts that are debt’s sale, transfer, or placement to ownership documentation, debt subject subject to identity theft reports, the sale, ascertain whether the debt has been to litigation, and debt that has been transfer, or placement of such debts is discharged in bankruptcy. extinguished pursuant to State law. Industry commenters also suggested They also suggested that the Bureau 533 The Bureau proposed § 1006.30(e) to changes to the proposed transfer ban’s clarify that the proposed ban of the sale, implement FDCPA section 812, 15 U.S.C. 1692j. 84 application to a debt for which an transfer, or placement of ‘‘debt that has FR 23274, 23333 (May 21, 2019). FDCPA section identity theft report has been filed. been paid or settled’’ would apply if a 812 addresses the furnishing of deceptive forms and These commenters asserted that the consumer has entered into an applies to any person, not just to debt collectors. As noted in the proposal, § 1006.30(e), like the rest proposed transfer ban would increase uncompleted settlement agreement, as of the rule, applies only to FDCPA debt collectors. consumers’ incentives to make false opposed to being limited to a completed FDCPA section 812 continues to prohibit other identity theft claims in order to avoid repayment agreement. They also persons from furnishing deceptive forms. Id. at repaying their debts. These commenters suggested that the rule explicitly 23286 n.137. 534 15 U.S.C. 1681 et seq. FCRA section 603(f) is requested that the rule permit a debt prohibit the collection of these types of codified at 15 U.S.C. 1681a. collector to investigate a consumer’s debt (in addition to banning their 535 See 84 FR 23274, 23329–30 (May 21, 2019). identity-theft claim—within a transfer, placement, or sale). Further, 536 See id. at 23330–32. prescribed time period of, for example, they suggested that, if an identity-theft

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76841

report has been filed regarding a debt, debt under FDCPA section 808 because Bureau’s incorporation of identity-theft- the rule should prohibit a debt collector consumers do not owe or cannot legally related debt in proposed § 1006.30(b)(1). from reporting the debt to a credit be subject to collections on alleged Moreover, because FCRA section 615(f) reporting agency (in addition to banning debts that have been paid or settled or prohibits a person from selling, its transfer, placement, or sale). discharged in bankruptcy, and yet the transferring for consideration, or placing A comment letter from Federal debt collector receives or expects to for collection a debt after such person government agency staff did not address receive compensation for the sale, has been notified in accordance with the expanding the proposed transfer ban to transfer, or placement of such debt.537 FCRA that the debt resulted from encompass the above-mentioned types Because the Bureau is finalizing identity theft, the Bureau believes that of debt but did recommend that the § 1006.30(b)(1) pursuant solely to its these consumer protection concerns can Bureau prohibit the sale, transfer, or FDCPA authority, the Bureau be addressed by adding new comment placement of debts that are counterfeit determines it is clear, as the Bureau 30(b)(1)–2, which states that nothing in or fictitious. This letter also observed intended and stated in the proposal, that § 1006.30(b)(1) alters a debt collector’s that the FCRA currently prohibits a § 1006.30(b)(1) of the final rule does not obligation to comply with the person from selling, transferring, or apply to creditors, except to the extent prohibition set forth in FCRA section placing for collection any debt after the creditor is an FDCPA debt collector. 615(f)(1) (15 U.S.C. 1681m(f)(1)).539 being notified that the debt resulted Accordingly, the Bureau concludes it is The Bureau also declines to expand from identity theft. not necessary or warranted for final the prohibition in § 1006.30(b)(1) to Consumer advocates suggested that § 1006.30(b)(1) to include a safe harbor encompass other types of debt beyond the transfer ban in proposed or other requested clarifications for debt that has been paid or settled or § 1006.30(b)(1) be modified in several accounts that creditors sell or transfer as discharged in bankruptcy. The Bureau additional respects. Some suggested that part of a portfolio subject to a concludes that the transfer of time- the rule prohibit the sale, transfer, or repurchase agreement. barred debt, disputed debt, debt lacking placement of debt unless the prior debt As to concerns about the breadth of ownership documentation, debt subject collector represents in writing that the the ‘‘know or should know’’ language, to litigation, debt in which the debt has not been paid, settled, or the Bureau notes that the prohibition in consumer has an uncompleted otherwise discharged; is not time § 1006.30(b)(1) is limited to specific settlement agreement, or other types of barred; and whether the debt is subject account circumstances. These account debt suggested by commenters do not to a dispute. Some suggested that the circumstances will, in general, be present the same unfairness and rule clarify that a debt collector may not within the debt collector’s ability to unconscionability concerns of the same require a consumer to file an identity- know or obtain the necessary prevalence and magnitude as the debt theft report with the police or to knowledge. For example, whether a debt types to which the prohibition in complete a specific identity-theft report has been paid or settled is a fact that a § 1006.30(b)(1) applies. The prohibition form required by the debt collector for debt collector knows or should know in § 1006.30(b)(1) applies to debts that the prohibition to apply. Instead, they because it should be within the debt are extinguished or uncollectible or that said, the rule should require a debt collector’s account management system. consumers do not owe. For the reasons collector to accept from a consumer the Although bankruptcy may not be within discussed above, the sale, transfer for FTC identity-theft report form, thereby the debt collector’s own system in the consideration, or placement for furthering the FTC’s goal of reducing the same manner as paid or settled debts, a collection of the debts described in need for police reports. They also § 1006.30(b)(1) is unfair or debt collector should be able to utilize suggested that the rule require debt unconscionable collection activity a commercial database or publicly collectors to perform a search of PACER under FDCPA section 808 because the available records to reasonably assess or of another commercially available consumer does not owe or cannot whether a debt has been discharged in database to screen for bankruptcy legally be subject to collection of such bankruptcy.538 Because of the limited discharges prior to a debt’s sale, debt. While the debt types listed above nature of the transfer ban as finalized, transfer, or placement for collection. in this paragraph may present consumer the Bureau believes the ‘‘know or Taking into consideration all the protection concerns, and while their should know’’ standard is appropriate comments regarding the proposed collection remains subject to the but will monitor this issue for any transfer ban in § 1006.30(b)(1), the FDCPA’s general prohibitions on potential consumer harm or compliance Bureau is finalizing the ban and its harassment or abuse, false or misleading concerns and revisit at a later time if commentary with substantial revisions, statements, and unfair or needed. as follows. unconscionable practices, the Bureau The Bureau declines to apply the Subject to the exceptions in declines to expand the prohibition in prohibition in final § 1006.30(b)(1) to § 1006.30(b)(2), final § 1006.30(b)(1) § 1006.30(b)(1) to encompass them. prohibits a debt collector from selling, debts for which the consumer has The Bureau declines to finalize a transferring for consideration, or placing reported identity theft. The Bureau prohibition regarding the sale, transfer for collection a debt if the debt collector believes that transfer of these debts is a for consideration, or placement for knows or should know that the debt has consumer protection concern but collection of debt that a debt collector been paid or settled or discharged in recognizes that commenters identified bankruptcy. The Bureau is finalizing several complexities with respect to the 539 The Bureau considered the comments it § 1006.30(b)(1) pursuant solely to its received regarding prohibiting a debt collector from FDCPA authority. The Bureau has 537 The Bureau has not determined in connection reporting an identity-theft debt to a credit reporting with this final rule whether the sale, transfer for agency and from requiring a consumer to use a determined that the sale, transfer for consideration, or placement for collection of such specific identity-theft report form. The FCRA consideration, or placement for debts constitutes an unfair act or practice under provides a private right of action and places collection of a debt that a debt collector section 1031 of the Dodd-Frank Act. liability on ‘‘any person’’ for failure to comply with knows or should know has been paid or 538 Depending on the circumstances, FDCPA the FCRA. See FCRA sections 616 through 618, 15 section 813(c)’s defense against civil liability may U.S.C. 1681n–1681p. As a result, the Bureau settled or discharged in bankruptcy also apply where a debt collector utilizes a concludes it is unnecessary for the prohibition in constitutes an unfair or unconscionable commercial database to reasonably assess whether § 1006.30(b)(1) to address debt collector practices in means to collect or attempt to collect the a debt has been discharged in bankruptcy. the area of credit reporting.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76842 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

knows or should know has been collector and the previous owner; (2) § 1006.30(b)(2)(iii), for securitizations or extinguished pursuant to State law or is proposed in § 1006.30(b)(2)(iii) to pledges as collateral of portfolios of counterfeit or fictitious. It clearly is an permit a debt collector to securitize debts, should be eliminated because the unfair or unconscionable practice under such debt, or to pledge a portfolio of debt types in proposed § 1006.30(b)(1) FDCPA section 808 for a debt collector such debt as collateral in connection cannot legally be collected and therefore to sell, transfer for consideration, or with a borrowing; and (3) proposed in should not be securitized or pledged as place for collection a debt that the debt § 1006.30(b)(2)(iv) to allow a debt collateral. These commenters also stated collector knows or should know has collector to transfer such debt as a result that the other proposed exceptions (in been extinguished pursuant to State law of a merger, acquisition, purchase and § 1006.30(b)(2)(i), (ii), and (iv)) should or is counterfeit or fictitious. assumption transaction, or a transfer of be limited to transfers of debt, because As noted above, some commenters substantially all of the debt collector’s those exceptions do not involve sales or stated that the term ‘‘transfer’’ should be assets. placements for collection. Finally, these clarified. The Bureau agrees, and final With respect to the exceptions set commenters stated that, if a debt § 1006.30(b)(1) therefore states that ‘‘a forth in proposed § 1006.30(b)(2), collector transfers an account to the debt collector must not sell, transfer for industry commenters stated that the owner or to a prior owner, per the consideration, or place for collection a proposed ban of the sale, transfer, or exceptions in proposed debt if the debt collector knows or placement of a debt that has been § 1006.30(b)(2)(i) and (ii), the rule should know. . . .’’ (emphasis added). discharged in bankruptcy should treat should require the transferring collector In addition, the Bureau is adopting new secured debt differently. Specifically, to clearly disclose the applicable comment 30(b)(1)–1 to clarify that a these commenters said, if the discharged category of debt being transferred (e.g., debt collector transfers a debt for debt is a secured debt, including but not discharged, paid, or settled debt). consideration if the debt collector limited to a residential mortgage, the In light of both industry and receives or expects to receive transfer ban should not impede a consumer advocates’ comments, the compensation for the transfer. A debt creditor’s ability to maintain and final rule includes a new exception in collector does not transfer a debt for exercise its security interest in the § 1006.30(b)(2)(ii) for secured debts. The consideration if the debt collector sends collateral that secures the discharged exception states that a debt collector information about the debt, as opposed debt. Industry commenters suggested may sell, transfer for consideration, or to the debt account itself, to another several approaches through which the place for collection a debt that has been party. For example, a debt collector does rule might accomplish this objective, discharged in bankruptcy if the debt is not transfer a debt for consideration if such as by including an exemption from secured by an enforceable lien and the the debt collector sends a file with data the transfer ban for secured claims for debt collector provides notice to the about the debt to another person for residential mortgage loans and other transferee that the consumer’s personal analytics, ‘‘scrubbing,’’ or archiving. A secured debts. liability for the debt was discharged in debt collector also does not transfer a Consumer advocates also suggested bankruptcy. The Bureau determines that debt for consideration if the debt changes to the proposed exceptions set the notice requirement will help ensure collector reports to a credit reporting forth in § 1006.30(b)(2). Like industry that the transfer of the discharged, agency information that a debt has been commenters, consumer advocates secured debt is not an unfair or paid or settled or discharged in suggested that the ban be modified with unconscionable practice because the bankruptcy. respect to mortgage debt. They observed compensation that the transferring debt that, after a bankruptcy discharge, the collector receives (or expects to receive) 30(b)(2) Exceptions owner of the loan (or a debt collector for the transfer will not be related to the Proposed § 1006.30(b)(2) set forth four acting on the owner’s behalf) may consumer’s personal liability on the narrow exceptions to proposed nevertheless conduct a foreclosure sale debt. In addition, the notice requirement § 1006.30(b)(1) to accommodate if the borrower defaults on payments will help ensure that the transferee debt circumstances in which allowing the due under the loan obligation. Citing 11 collector does not engage in a deceptive sale, transfer, or placement of the debts U.S.C. 524(j), consumer advocates also debt collection practice by trying to described in proposed § 1006.30(b)(1) observed that the bankruptcy code collect on the debt as a personal liability for certain bona fide business purposes includes an exception to the discharge of the consumer. other than debt collection may not order that allows post-discharge debt With respect to consumer advocates’ create a significant risk of unfair collection limited to seeking or other suggested changes to the collections activity. The Bureau obtaining periodic payments due under exceptions set forth in proposed proposed in § 1006.30(b)(2)(i) to allow a a mortgage when the creditor seeks the § 1006.30(b)(2), the Bureau notes as debt collector to transfer a debt payments as an alternative to exercise of follows. Proposed § 1006.30(b)(2)(i), (ii), described in proposed § 1006.30(b)(1) to its right to foreclose. Consumer and (iv) were limited to ‘‘transfers’’ and the debt’s owner. The Bureau proposed advocates suggested including an did not encompass sale or placement for in § 1006.30(b)(2)(ii) through (iv) three additional exception under collection; final § 1006.30(b)(2)(i) additional exceptions that paralleled the § 1006.30(b)(2) to address these includes a revision to clarify this point. FCRA’s exceptions to its prohibition on concerns and requested that the The Bureau declines to eliminate the the sale, transfer for consideration, or additional exception include a exception in § 1006.30(b)(2)(iii) for placement for collection of debt caused requirement that the transferring debt securitizations and pledges of debt by identity theft.540 Specifically, (1) the collector identify the debt as one for because the Bureau concludes, as noted Bureau proposed in § 1006.30(b)(2)(ii) to which the personal liability of the in the proposal,541 that a debt collector allow a debt collector to transfer a debt debtor has been discharged in who securitizes or pledges a portfolio of described in proposed § 1006.30(b)(1) to bankruptcy. debt may be unable to exclude the debts a previous owner if the transfer is In addition, consumer advocates described in § 1006.30(b)(1) from the authorized under the terms of the suggested other changes to the proposed portfolio. Finally, the Bureau declines to original contract between the debt exceptions to the transfer ban set forth require a debt collector who transfers for in § 1006.30(b)(2). These commenters 540 See 15 U.S.C. 1681m(f)(3). stated that the exception in proposed 541 84 FR 23274, 23332 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76843

consideration a debt to the owner or a prohibition. The Bureau concludes that rule. For these reasons, the Bureau is previous owner (pursuant to the it is not advisable to finalize such reserving § 1006.34 and appendix B. exceptions in § 1006.30(b)(2)(i)(A) and clarifications, which the Bureau did not Section 1006.38 Disputes and Requests (B)) to disclose the applicable category propose, without the benefit of public for Original-Creditor Information of debt being transferred (i.e., paid, notice and comment on the specific settled, or discharged debt). The Bureau clarifications requested. Accordingly, FDCPA section 809(b) requires debt concludes that such disclosure is not the Bureau is finalizing § 1006.30(d) as collectors to take certain actions and to necessary or warranted to avoid an proposed. refrain from taking certain actions if a unfair or unconscionable practice. consumer either disputes the debt in The Bureau adopts the prohibition set Section 1006.34 Notice for Validation writing or requests the name and forth in § 1006.30(b)(1) and the of Debts address of the original creditor in exceptions set forth in § 1006.30(b)(2) FDCPA section 809(a) generally writing during the 30-day period after pursuant to its authority under FDCPA requires a debt collector to provide the consumer receives the written notice section 814(d) to prescribe rules with certain information to a consumer either described in FDCPA section 809(a). In respect to the collection of debts by debt at the time that, or shortly after, the debt turn, FDCPA section 809(c) states that a collectors. As stated above, the Bureau collector first communicates with the consumer’s failure to dispute a debt has determined that the sale, transfer for consumer in connection with the under FDCPA section 809(b) may not be consideration, or placement for collection of a debt. The required construed by any court as an admission collection of a debt that a debt collector information—i.e., the validation of liability.549 The Bureau proposed knows or should know has been paid or information—includes details about the § 1006.38 to implement and interpret settled or discharged in bankruptcy debt and about consumer protections, FDCPA section 809(b) and (c), pursuant constitutes an unfair or unconscionable such as the consumer’s rights to dispute to its authority under FDCPA section means to collect or attempt to collect the the debt and to request information 814(d) to prescribe rules with respect to debt under FDCPA section 808. about the original creditor.546 The the collection of debts by debt Therefore, pursuant to FDCPA section Bureau proposed § 1006.34 to require collectors.550 Pursuant to this same 814(d), the Bureau prescribes the rules debt collectors to provide certain authority, the Bureau is finalizing in § 1006.30(b) with respect to that validation information to consumers § 1006.38 as discussed below. unfair or unconscionable means of and to specify when and how the Proposed comment 38–1 would have collection of debts by debt collectors. information must be provided. In clarified the applicability of § 1006.38 in addition, the Bureau proposed Model the decedent debt context. As described 30(c) Multiple Debts Form B–3 in appendix B as a model in the section-by-section analysis of The Bureau proposed § 1006.30(c) to validation notice form that debt § 1006.2(e), the Bureau proposed to implement FDCPA section 810 542 collectors could use to comply with interpret the term consumer in FDCPA regarding multiple debts.543 The certain disclosure requirements in section 803(3) to include deceased proposed provision generally restated proposed § 1006.34.547 consumers. The Bureau proposed that the statutory text, with only minor The Bureau is not finalizing proposed interpretation, in large part, to facilitate revisions for clarity. Two industry § 1006.34 at this time. The Bureau is the delivery of validation notices under commenters addressed proposed completing its review and evaluation of proposed § 1006.34 when the consumer § 1006.30(c) and asked the Bureau to comments regarding proposed obligated, or allegedly obligated, on the provide an exception to the prohibition § 1006.34, including the form and debt has died. The Bureau plans to that would permit debt collectors to content of validation information. The address comments received regarding apply, at the consumer’s request, a Bureau also is conducting additional, that interpretation, as well as whether single payment made with respect to qualitative disclosure testing that may and how to finalize proposed comment multiple debts to a debt that the be used to further validate proposed 38–1, as part of the Bureau’s disclosure- consumer had disputed. The Bureau is Model Form B–3 and to inform focused final rule.551 not aware of confusion or concerns statements about the quality of the The Bureau proposed comment 38–2 regarding this issue and the minor validation notice in the final to interpret the applicability of the revisions for clarity are not intended to rulemaking.548 For instance, the Bureau E–SIGN Act as it relates to FDCPA change the meaning of the statute. The seeks insight through the consumer section 809(b)’s writing requirement for Bureau therefore declines to adopt such testing into how consumers would consumers’ submission of disputes or an exception. interact with the proposed model form, requests for original-creditor information. Section 101(a)(1) of the E– 30(d) Legal Actions by Debt Collectors if finalized. The Bureau plans to address comments received regarding proposed SIGN Act generally provides that a The Bureau proposed § 1006.30(d) to § 1006.34 and proposed appendix B as record relating to a transaction in or 544 implement FDCPA section 810 part of the Bureau’s disclosure-focused affecting interstate or foreign commerce regarding legal actions by debt final rule. The Bureau intends to issue may not be denied legal effect, validity, 545 collectors. The proposed provision a report about the ongoing qualitative or enforceability solely because it is in generally restated the statutory text, testing in connection with that final electronic form. However, section with only minor revisions for clarity. 101(b)(2) of the E–SIGN Act (15 U.S.C. The Bureau received a few comments 546 See 15 U.S.C. 1692g(a). 7001(b)(2)) does not require any person asking the Bureau to clarify whether 547 See 84 FR 23274, 23333–52 (May 21, 2019). to agree to use or accept electronic specific practices related to the filing of 548 Dodd-Frank Act section 1032(b)(1) provides records or electronic signatures (other legal actions either are unfair or that ‘‘any final rule prescribed by the Bureau under than a governmental agency with unconscionable or do not violate the this section requiring disclosures may include a respect to a record other than a contract model form that may be used at the option of the covered person for provision of the required 542 15 U.S.C. 1692h. disclosures.’’ 12 U.S.C. 5532(b)(1). Dodd-Frank Act 549 15 U.S.C. 1692g(b)–(c). 543 84 FR 23274, 23333 (May 21, 2019). section 1032(b)(3) provides that any such model 550 84 FR 23274, 23352–55 (May 21, 2019). 544 15 U.S.C. 1692i. form ‘‘shall be validated through consumer testing.’’ 551 See the section-by-section analysis of 545 84 FR 23274, 23333 (May 21, 2019). 12 U.S.C. 5532(b)(3). § 1006.34.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76844 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

to which it is a party). The Bureau 38(a)(2) Validation Period request the name and address of the proposed in comment 38–2 that FDCPA The Bureau’s proposed definition of original creditor. These commenters section 809(b)’s writing requirement is validation period in § 1006.38(a)(2) asserted that overshadowing claims are satisfied when a consumer submits a cross-referenced the definition of that nonetheless some of the most common dispute or request for original-creditor term in proposed § 1006.34(b)(5). The allegations in FDCPA lawsuits. These information using a medium of Bureau expects to address comments commenters also requested clarity as to electronic communication through received on proposed § 1006.34(b)(5) as whether the safe harbor in proposed which a debt collector accepts part of its disclosure-focused final rule. § 1006.34(d)(2) for debt collectors who electronic communications from Therefore, at the present time, the use proposed Model Form B–3 in consumers, such as email or a website Bureau is finalizing the definition in proposed appendix B also precludes portal. Thus, under the proposal, a debt § 1006.38(a)(2) with revised wording to suits for violations of the collector was required to give legal refer to the 30-day period described in overshadowing prohibition in proposed effect to an electronic consumer dispute FDCPA section 809 (rather than the § 1006.38(b). One industry commenter or request for original-creditor definition in proposed § 1006.34(b)(5)) requested that the final rule clarify that information only if the debt collector as defined by Bureau regulation. The credit reporting during the validation agreed to accept electronic Bureau will consider revising the period does not constitute communications from consumers. The definition of validation period in overshadowing. Bureau proposed to codify this E–SIGN § 1006.38(a)(2) to cross-reference any At this time, the Bureau is finalizing Act interpretation in proposed comment such definition of that term that the proposed § 1006.38(b) as § 1006.38(b)(1) 38–3. and is reserving § 1006.38(b)(2). As The comments the Bureau received on Bureau adopts in the disclosure-focused final rule. noted above, proposed § 1006.38(b) comments 38–2 and –3 expressed generally restated the statute, with only support. The Bureau finalizes this 38(b) Overshadowing of Rights To minor changes for style and clarity, and commentary as proposed, renumbered Dispute or Request Original-Creditor final § 1006.38(b)(1) does the same. The as comments 38–1 and –2, respectively. Information Bureau expects to address the comments E–SIGN Act section 104(b)(1)(A) (15 FDCPA section 809(b) provides that, it received requesting further clarity U.S.C. 7004(b)(1)(A)) authorizes a for 30 days after the consumer receives about the extent of the safe harbor that Federal agency with rulemaking the validation notice information would be provided by proposed authority under a statute (here, the described in FDCPA section 809(a), a § 1006.34(d)(2) as part of its disclosure- FDCPA) to interpret by regulation focused final rule. The Bureau is E–SIGN Act section 101 with respect to debt collector must not engage in collection activities or communications reserving § 1006.38(b)(2) for the purpose such statute. Pursuant to E–SIGN Act of providing any such safe harbor. section 104(b)(1)(A), the Bureau has that overshadow or are inconsistent determined that the final rule as with the disclosure of the consumer’s 38(c) Requests for Original-Creditor reflected in final comments 38–1 and –2 right to dispute the debt or request Information does not contravene E–SIGN Act section information about the original 553 FDCPA section 809(b) provides that, if 101(b)(2) (15 U.S.C. 7001(b)(2)) because creditor. The Bureau proposed in a consumer requests the name and the comments do not require a debt § 1006.38(b) to implement this address of the original creditor in collector to agree to use or accept prohibition and generally restate the writing within 30 days of receiving the consumers’ electronic notices of statute, with only minor changes for validation notice information described disputes or requests for original-creditor style and clarity. in FDCPA section 809(a), the debt information if the debt collector does The Bureau received a few collector must cease collection of the not otherwise accept electronic substantive comments addressing 554 debt until the debt collector obtains and communications from consumers. proposed § 1006.38(b). Two industry mails that information to the consumer. Further, if a debt collector agrees to commenters requested that the final rule accept these notices or requests define the term ‘‘overshadowing.’’ These The Bureau proposed in § 1006.38(c) to electronically from consumers, the commenters observed that debt implement and interpret this comments do not prohibit the debt collectors’ communications of requirement. In general, proposed collector from requesting consumers to validation notice information almost § 1006.38(c) mirrored the statute, with send these electronic communications always expressly advise the consumer of minor changes for style and clarity. To through online portals or to email the right to dispute the debt and to accommodate electronic media through addresses designated by the debt which a debt collector could send 553 collector.552 This language was added to the FDCPA by the original-creditor information under Financial Services Regulatory Relief Act of 2006, proposed § 1006.42, proposed 38(a) Definitions Public Law 109–351, sec. 802(c), 120 stat. 1966, § 1006.38(c) interpreted FDCPA section 2006 (2006), after an FTC advisory opinion on the 38(a)(1) Duplicative Dispute same subject. See Fed. Trade Comm’n, Advisory 809(b) to require debt collectors to Opinion to American Collector’s Ass’n (Mar. 31, ‘‘provide,’’ rather than to ‘‘mail,’’ The Bureau is finalizing the definition 2000) (opining that the 30-day period set forth in original-creditor information to of duplicative dispute as proposed. The FDCPA section 809(a) ‘‘is a dispute period within consumers in a manner consistent with which the consumer may insist that the debt Bureau’s reasoning is discussed below the delivery provisions in proposed under § 1006.38(d)(2)(ii) in this section- collector verify the debt, and not a grace period within which collection efforts are prohibited’’ but § 1006.42. by-section analysis. that ‘‘[t]he collection agency must ensure, however, The Bureau received a number of that its collection activity does not overshadow and comments addressing proposed 552 is not inconsistent with the disclosure of the The final rule’s prohibitions on harassing, 555 deceptive, and unfair practices in §§ 1006.14, consumer’s right to dispute the debt specified by § 1006.38(c). Three industry 1006.18, and 1006.22 continue to apply such that [s]ection 809(a).’’). a debt collector should not ignore a consumer’s 554 In addition, one industry representative stated 555 A few of these comments asked the Bureau to dispute or request for original-creditor information that it generally agrees with proposed § 1006.38, define the term original creditor. These received through an online portal or to an email and a group of consumer advocates that addressed commenters’ requests are largely related to address not designated by the debt collector for proposed § 1006.38(b) did not object to the clarifications for purposes of the notice required by receiving such disputes or requests. proposal. FDCPA section 809(a), so the Bureau will address

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00112 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76845

commenters requested that the final rule debt collector will provide the Bureau received one comment generally provide that, if a debt collector’s consumer with the name and address of supporting proposed § 1006.38(d)(1) and communication of the validation notice the original creditor, if different from one comment arguing that information to a consumer identifies the the current creditor.’’ 558 Further, § 1006.38(d)(1) is inconsistent with original creditor, the debt collector need FDCPA section 809(b) states that ‘‘[a]ny FDCPA section 809(a)(3), which not give the consumer the option of collection activities and communication requires a debt collector to disclose that, requesting original-creditor information during the 30-day period may not unless a consumer disputes the validity from the debt collector. These overshadow or be inconsistent with the of the debt within thirty days of commenters stated that, if the original disclosure of the consumer’s right to receiving the validation notice, the debt creditor has already been identified to a dispute the debt or request the name collector will assume the debt is 559 consumer, it would be confusing to the and address of the original creditor.’’ valid.560 The Bureau disagrees that there consumer to provide the option to However, the Bureau also believes is an inconsistency. FDCPA section that FDCPA section 809(a)(5) request the name and address of the 809(a)(3) addresses a debt collector’s contemplates that a debt collector may original creditor. Further, they stated, assumption regarding the validity of the consumers could use unnecessary respond differently to the consumer’s debt; § 1006.38(d)(1) addresses whether requests for original-creditor request for original-creditor information a consumer’s failure to dispute is a legal information as a tactic to delay or avoid when the original creditor is not admission of liability. Accordingly, the collection. One industry commenter ‘‘different from the current creditor.’’ requested that the final rule clarify that Because the question of how a debt Bureau is finalizing § 1006.38(d)(1) as a debt collector is not required to collector may respond to a request for proposed. include original-creditor information in original-creditor information when the 38(d)(2) Response to Disputes its communication of validation notice original creditor is the same as the information to a consumer. This current creditor implicates the proposed FDCPA section 809(b) provides that, if commenter stated that lawsuits are often § 1006.34 provisions regarding a consumer disputes a debt in writing filed alleging that the FDCPA is violated disclosure of validation notice within 30 days of receiving the if the communication does not identify information, which are not being information or notice described in the original creditor. finalized at this time, the Bureau is not FDCPA section 809(a), the debt collector A group of consumer advocates who at the present time providing in must cease collection of the debt, or any addressed proposed § 1006.38(c) § 1006.38(c) an alternative response disputed portion of the debt, until the generally noted the importance of mechanism for this situation. The debt collector obtains verification of the original-creditor information to Bureau expects to address further the debt or a copy of a judgment and mails consumers in helping them recognize comments received on this topic as part it to the consumer. Section the debt in question. One commenter of its disclosure-focused final rule and 1006.38(d)(2) implements and interprets stated that the rule should require debt may provide by regulation for this requirement. collectors to identify the original alternative procedures when the original creditor in the validation notice creditor is the same as the current 38(d)(2)(i) information.556 creditor. The Bureau is finalizing § 1006.38(c) For the same reason—that the Bureau The Bureau proposed in generally as proposed.557 In the final is not presently finalizing the proposed § 1006.38(d)(2)(i) to implement FDCPA rule, the Bureau has changed the word § 1006.34 provisions for how validation section 809(b)’s general requirements ‘‘provides’’ to ‘‘sends.’’ The reason for notice information must be disclosed— regarding disputes and verification. this change is discussed in the section- the Bureau is not at the present time Proposed § 1006.38(d)(2)(i) generally by-section analysis of § 1006.42(a)(1). addressing (in response to comments mirrored the statute, with minor The Bureau declines to provide that a from both industry commenters and changes for style and clarity. To debt collector’s communication of the consumer advocates, as noted above) accommodate various electronic media validation notice information may omit whether a debt collector must include through which a debt collector could the option to request original-creditor original-creditor information in its send a copy of verification or a information if the debt collector has communication of validation notice judgment under proposed § 1006.42, already identified the original creditor information to a consumer. The Bureau proposed § 1006.38(d)(2)(i) interpreted to the consumer. The FDCPA expressly expects to address these comments in its FDCPA section 809(b) to require debt provides a consumer the right to request disclosure-focused final rule and may collectors to provide, rather than to original-creditor information from a provide by regulation for alternative mail, such information to consumers in debt collector. FDCPA section 809(a)(5) procedures when the original creditor is a manner consistent with the delivery states that the validation notice the same as the current creditor. provisions in proposed § 1006.42. information must include ‘‘a statement 38(d) Disputes The Bureau received no comments that, upon the consumer’s written 38(d)(1) Failure To Dispute objecting to proposed § 1006.38(d)(2)(i) request within the 30-day period, the and is finalizing it generally as The Bureau proposed § 1006.38(d)(1) proposed.561 In the final rule, the these comments as part of its disclosure-focused to implement FDCPA section 809(c), Bureau has changed the word final rule. which states that the failure of a 556 ‘‘provides’’ to ‘‘sends.’’ The reason for Consumer advocates also addressed the consumer to dispute the validity of a proposal’s provisions regarding electronic delivery this change is discussed in the section- debt may not be construed by any court of original-creditor information (and other by-section analysis of § 1006.42(a)(1). information) in proposed § 1006.42. These as an admission of liability by the comments regarding electronic delivery are consumer. Proposed § 1006.38(d)(1) addressed in the section-by-section analysis of generally restated the statute, with non- 560 15 U.S.C. 1692g(3). § 1006.42. 561 The Bureau received numerous comments 557 The Bureau is renumbering § 1006.38(c) as substantive changes for style. The regarding the proposed electronic delivery § 1006.38(c)(1) and is reserving § 1006.38(c)(2) for requirements in proposed § 1006.42. Those any alternative procedures that the Bureau finalizes 558 15 U.S.C. 1692g(a)(5). comments are addressed in the section-by-section in its disclosure-focused final rule. 559 15 U.S.C. 1692g(b) (emphasis added). analysis of § 1006.42.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76846 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

38(d)(2)(ii) responds to the dispute, and the a telephone call. Finally, in their The Bureau proposed in consumer resubmits the dispute, all comments on proposed § 1006.42(b) § 1006.38(d)(2)(ii) to establish an within the 30-day validation period. (discussed below), some industry alternative way for debt collectors to They also stated that the proposed commenters stated that debt collector respond to disputes that they reasonably definition would give too much responses to consumer disputes as conclude are duplicative disputes as discretion to debt collectors to required by § 1006.38(d)(2) are not that term is defined in § 1006.38(a)(1). determine if a dispute is duplicative. written ‘‘disclosures’’ (but are instead, The Bureau proposed in § 1006.38(a)(1) They stated that the Bureau should in these commenters’ view, documents to define the term ‘‘duplicative dispute’’ either limit collector discretion by substantiating the debt) and, therefore, to mean a dispute submitted by the including additional criteria in the the rule should not require debt consumer in writing within the ‘‘duplicative dispute’’ definition or collectors to obtain consumers’ E–SIGN validation period that satisfies two eliminate the alternative response to consent before providing dispute criteria. The first criterion was that the duplicative disputes set forth in responses electronically. dispute is substantially the same as a § 1006.38(d)(2)(ii). Finally, some Consumer advocates, as noted above, dispute previously submitted by the consumer advocates stated that the expressed concern that the definition of consumer in writing within the definition of duplicative dispute should duplicative dispute in § 1006.38(a)(1) validation period to which the debt include an additional criterion under gives too much discretion to debt collector has already responded in which a consumer’s dispute is collectors to determine if a dispute is accordance with the requirements of duplicative only if the consumer duplicative. But, they said, taking that § 1006.38(d)(2)(i). The second criterion submits the second dispute to the same definition as given, the alternative was that the dispute does not include debt collector who provided a copy of response mechanism for a duplicative dispute set forth in proposed new and material supporting the debt verification or judgment to the § 1006.38(d)(2)(ii) should be eliminated information. consumer in response to the consumer’s Proposed § 1006.38(d)(2)(ii) provided first dispute. from the final rule, because the that, upon receipt of a duplicative With respect to the proposed proposed treatment of disputes would dispute, a debt collector must cease alternative response to duplicative not reduce the number of duplicative collection of the debt, or any disputed disputes in § 1006.38(d)(2)(ii), industry disputes because it would not mandate portion of the debt, until the debt commenters generally suggested that debt collectors review and provide collector either: Notifies the consumer substantial changes to make it easier for copies of original, account-level debt collectors to address disputes that documentation in response to consumer in writing or electronically in a manner they determine to be duplicative. Some disputes and would not prohibit debt permitted by § 1006.42 that the dispute industry commenters stated that the collectors from responding to disputes is duplicative, provides a brief duplicative dispute provision should by providing summary data found in the statement of the reasons for the permit debt collectors to disregard all debt collector’s database. determination, and refers the consumer disputes submitted by debt-relief The Bureau is finalizing as proposed to the debt collector’s response to the companies. Others stated that the the definition of duplicative dispute in earlier dispute; or satisfies provision should permit debt collectors § 1006.38(a)(1). The Bureau also is § 1006.38(d)(2)(i).562 to disregard all disputes that meet the finalizing largely as proposed the The Bureau received numerous definition of duplicative dispute in optional alternative response substantive comments on the Bureau’s § 1006.38(a)(1). Others stated that the mechanism for a duplicative dispute in proposal regarding duplicative disputes, provision should permit debt collectors § 1006.38(d)(2)(ii), but with one change including the proposed definition of to disregard all disputes (whether or not intended to reduce burden for debt duplicative dispute. collectors who choose to use the With respect to the definition of duplicative) submitted by consumers alternative response mechanism. This duplicative dispute in § 1006.38(a)(1), outside of the 30-day validation period. change will thus also benefit consumers industry commenters stated that the Finally, others stated that, by defining what it means for a debt collector to by allowing debt collectors to devote Bureau should provide more clarity ‘‘verify’’ a debt—and by also requiring more resources to non-duplicative about the meaning of ‘‘substantially the consumers to include specific consumer disputes, as follows. same.’’ These commenters stated that information when they dispute a debt— Regarding the duplicative dispute the lack of clarity might result in the the Bureau could reduce burden by definition, the Bureau believes that the threat of additional disputes and making it easier for debt collectors to meaning of ‘‘substantially the same’’ is litigation, which might make it not identify and dispose of disputes that are sufficiently clear and is a concept that worthwhile for debt collectors to use the duplicative. is already present in other regulations. proposed alternative response Some industry commenters suggested For example, Regulation V, 12 CFR mechanism for duplicative disputes. more minor changes with respect to 1022, § 1022.43(f)(1)(ii) addresses direct Consumer advocates observed that it how the rule should permit debt disputes to a furnisher that are is unlikely that a consumer would collectors to address disputes that they ‘‘substantially the same as a dispute submit a dispute that meets the determine to be duplicative. previously submitted by or on behalf of proposed duplicative dispute definition, Specifically, some of these commenters the consumer.’’ And, Regulation X, 12 because it is rare that a consumer suggested that, if a debt collector CFR 1024, § 1024.35(g)(1)(i) addresses submits a dispute, a debt collector receives a consumer’s dispute consumer-asserted errors to a mortgage electronically, then the rule should servicer that are ‘‘substantially the same 562 The Bureau did not propose to address duplicative requests for original-creditor permit the debt collector to respond to as an error previously asserted by the information. As the Bureau noted in its proposal, the dispute electronically, irrespective borrower for which the servicer has some members of the debt collection industry have of whether the debt collector has the previously complied with its obligation described being overwhelmed by the number of consumer’s to respond.’’ Similarly, Regulation X repeat disputes they receive. Industry members have not described any similar concerns about E–SIGN consent. Others suggested that § 1024.36(f)(1)(i) addresses a request for duplicative requests for original-creditor the rule permit debt collectors to information to a mortgage servicer that information. 84 FR 23274, 23354 (May 21, 2019). respond to duplicative disputes through ‘‘is substantially the same as

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76847

information previously requested by the debts (or copies of judgments) as they while debt collectors’ electronic borrower for which the servicer has do today. responses to initial disputes must also previously complied with its obligation The Bureau has determined that debt comply with § 1006.42(b). to respond.’’ The Bureau therefore collectors’ responses to consumer The Bureau believes there may be declines to provide examples in the disputes are disclosures of information scenarios in which debt collectors commentary about the meaning of relating to a transaction or transactions, respond to consumers’ initial disputes ‘‘substantially the same’’ because doing as E-SIGN Act section 101(c)(1) uses in paper form because the debt so is unnecessary and unwarranted. that phrase.563 And the Bureau collectors do not have consumers’ E- The Bureau acknowledges that it is interprets the requirement in FDCPA SIGN consent, but in which the debt possible that consumers might section 809(b) that ‘‘a copy’’ of a collectors nonetheless can respond to infrequently submit disputes that meet verification of the debt or a judgment, or consumers’ duplicative disputes the duplicative dispute definition, the name and address of the original electronically, because the debt because it might be unusual for a creditor be ‘‘mailed’’ requires a writing. collectors have consumers’ email consumer to submit a dispute, a debt Nonetheless, the FDCPA does not addresses or mobile telephone numbers collector to respond, and the consumer explicitly address debt collectors’ for text messages. By adopting the to resubmit the dispute all within the responses to duplicative disputes and, duplicative dispute provision largely as 30-day validation period. With respect as a result, does not specify that proposed, but modified as described to both the meaning of ‘‘substantially responses to such disputes must involve above, the Bureau intends to provide a the same’’ and the frequency with mailing another copy of the verification method of delivery that allows debt which consumers submit duplicative or judgment. Rather, the statute says collectors the option to respond to disputes as defined, the Bureau expects that only ‘‘a’’ copy of the verification or duplicative disputes in a less to monitor consumers’ and debt judgment must be ‘‘mailed.’’ burdensome way, which may permit collectors’ responses to and Accordingly, the Bureau finds that the collectors to apply more resources to implementations of the duplicative statute is ambiguous as to whether responding to non-duplicative disputes, dispute aspect of the Bureau’s rule to responses to duplicative disputes must while also appropriately balancing ensure that the definition is not be mailed if a copy of the verification consumer protections, because those resulting in consumer harm and to or judgment previously has been electronic communications remain ascertain the extent to which the mailed. The Bureau therefore has subject to § 1006.42(a)(1). The Bureau duplicate dispute provisions allow debt discretion to determine whether the will monitor industry implementation collectors to devote more resources to E-SIGN Act’s consumer-consent of the final rule’s duplicative-disputes non-duplicative disputes. provisions apply if a debt collector provision to assess its impact on all Regarding the alternative response responds electronically to a duplicative stakeholders. The Bureau declines to permit mechanism for a duplicative dispute in dispute. For the policy reasons set forth collectors to respond to duplicative § 1006.38(d)(2)(ii), the Bureau declines below, the Bureau has determined to disputes orally. The Bureau concludes to adopt the substantial changes to the permit debt collectors to respond that FDCPA section 809(b) requires proposal that industry commenters electronically to disputes that they responses to consumers’ disputes in a suggested and declines to eliminate the determine to be duplicative without form that consumers may keep and mechanism from the final rule as obtaining the relevant consumers’ access later for the reasons discussed in consumer advocates suggested. With E-SIGN consent. the section-by-section discussion of respect to industry commenters’ In the final rule, the Bureau has § 1006.42.564 suggestion that the duplicative dispute effected this change in § 1006.42(b)(1), The Bureau is finalizing the provision permit debt collectors to which, as revised from the proposal, alternative procedure in disregard all disputes submitted by now provides that consumers’ § 1006.38(d)(2)(ii) for responding to debt-relief companies, the Bureau E-SIGN consent is necessary only for duplicative disputes as an interpretation declines to adopt a categorical approach debt collectors to respond electronically of FDCPA section 809(b) and pursuant because the Bureau cannot say that to consumers’ initial, non-duplicative to its rulemaking authority provided by every such dispute is duplicative. As to disputes (pursuant to § 1006.38(d)(2)(i)). FDCPA section 814(d). In particular, the suggestion that the rule permit debt As proposed, § 1006.42(a)(1) applies to § 1006.38(d)(2)(ii) interprets what it collectors to disregard all disputes that debt collectors’ responses to all means for a debt collector to ‘‘obtain[ ] meet the definition of duplicative disputes, including to duplicative verification of the debt or any copy of dispute, the Bureau determines that a disputes. Thus, debt collectors’ a judgment’’ and to provide ‘‘a copy of debt collector’s notice to a consumer responses to duplicative disputes (and such verification or judgment’’ to the that the debt collector has determined to initial disputes) must be provided in consumer when the debt collector that a dispute is a duplicative dispute, a manner that is reasonably expected to reasonably determines that a dispute is and the reasons for that determination, provide actual notice and in a form the a duplicative dispute. In some cases a may nevertheless be informative to the consumer may keep and access later, consumer might submit a timely written consumer and is consistent with the 563 dispute that is duplicative of an earlier statutory requirement to provide a See 15 U.S.C. 7001(c)(1) (stating that ‘‘if a statute, regulation, or other rule of law requires that dispute for which the debt collector response to disputes. Finally, the information relating to a transaction or transactions already obtained and mailed to the Bureau’s proposal did not define what in or affecting interstate or foreign commerce be consumer a copy of verification of the it means to verify a debt, and the Bureau provided or made available to a consumer in writing, the use of an electronic record to provide declines to do so in this final rule. The or make available (whichever is required) such 564 FDCPA section 809(b) states that, when a debt Bureau concludes that it is not information satisfies the requirement that such collector receives a consumer’s dispute, ‘‘the debt necessary or warranted to provide such information be in writing if (A) the consumer has collector shall cease collection of the debt, or any a definition because the Bureau affirmatively consented to such use and has not disputed portion thereof, until the debt collector withdrawn such consent. . . .’’) (emphasis added). obtains verification of the debt or a copy of a generally expects that debt collectors See also E-Sign Act sections 106(7) and (13) (15 judgment . . . and a copy of such verification or will respond to non-duplicative U.S.C. 7006(7) and (13)), which, respectively, define judgment . . . is mailed to the consumer by the disputes by providing verifications of ‘‘information’’ and ‘‘transaction’’ quite broadly. debt collector.’’

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00115 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76848 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

debt or a judgment. In those cases, the standard and on clarifying that a debt in a manner that is reasonably expected Bureau interprets FDCPA section collector who sends the required written to provide actual notice, and in a form 809(b)’s requirement to provide ‘‘a copy disclosures electronically must do so in that the consumer may keep and access of such verification or judgment’’ to the accordance with the E-SIGN Act. At this later. consumer to mean that a debt collector time, the Bureau declines to interpret In response to feedback, the Bureau is must provide the consumer either with whether, and if so when, the E-SIGN Act revising the proposed commentary for another copy of the materials the debt requires a debt collector to obtain § 1006.42(a)(1) in several ways, collector provided in response to the E-SIGN consent directly from the including by renumbering proposed earlier dispute, or with a notice consumer and declines to finalize the comment 42(a)(1)–1 as new comment explaining the reasons for the debt alternative procedures in proposed 42(a)(1)–2 and by adding three new collector’s determination that the § 1006.42(c). The Bureau is finalizing comments (final comments 42(a)(1)–1, dispute is duplicative and referring the § 1006.42 to implement and interpret –3, and –4) to incorporate text from consumer to the materials the debt FDCPA section 809(a) and (b) and proposed § 1006.42(b)(2) and (3), (e)(1), collector provided in response to the pursuant to its authority under FDCPA and comment 42(c)(1)–1. The Bureau is earlier dispute. section 814(d) to prescribe rules with not otherwise finalizing proposed The Bureau also is finalizing the respect to the collection of debts by debt § 1006.42(b)(2) or (3), (e)(1), or comment notice requirement of § 1006.38(d)(2)(ii) collectors. In addition, the Bureau is 42(c)(1)–1 and, therefore, addresses pursuant to the Bureau’s authority finalizing the general standard in comments received in response to those under Dodd-Frank Act section 1032(a). § 1006.42(a)(1) as an interpretation of provisions in this section-by-section As discussed above, Dodd-Frank Act FDCPA section 808’s prohibition on analysis. section 1032(a) provides that the Bureau using unfair or unconscionable means to Final Comment 42(a)(1)–1 may prescribe rules to ensure that the collect a debt.566 features of any consumer financial Proposed § 1006.42(b)(2) would have product or service, both initially and 42(a) Sending Required Disclosures required the debt collector to identify over the term of the product or service, 42(a)(1) In General the purpose of an electronic are fully, accurately, and effectively communication transmitting a required disclosed to consumers in a manner that The Bureau proposed § 1006.42(a)(1) disclosure by including in the email permits consumers to understand the to require a debt collector who provides subject line or the first line of a text costs, benefits, and risks associated with disclosures required by Regulation F in message the name of the creditor to the product or service, in light of the writing or electronically to do so: (1) In whom the debt is owed and one facts and circumstances. a manner that is reasonably expected to additional piece of information The Bureau is finalizing the notice provide actual notice to the consumer; identifying the debt, other than the requirement in § 1006.38(d)(2)(ii) on the and (2) in a form that the consumer may amount.569 Consumer advocates basis that a debt collector’s decision to keep and access later. Commenters expressed concern that proposed treat a dispute as a duplicative dispute generally supported this standard, and § 1006.42(b)(2) would be unlikely to under § 1006.38(d)(2)(ii) is a feature of the Bureau is finalizing it largely as lead many consumers to open or read debt collection. A debt collector’s notice proposed, with minor edits for clarity. emails or text messages from debt to a consumer that the debt collector has Specifically, final § 1006.42(a)(1) uses collectors and could lead some determined that a dispute is a the term sends, rather than the proposed consumers or their email providers to duplicative dispute, and the reasons for term provides, to clarify that a debt mark the messages as spam. Consumer that determination, may help the collector’s obligation under the rule— advocates suggested that the Bureau consumer understand the costs, and as the Bureau intended under the eliminate proposed § 1006.42(b)(2) and benefits, and risks associated with filing proposal—is to send required replace it with more robust monitoring additional disputes and deciding disclosures in a manner reasonably 567 to ensure consumers’ actual receipt of whether to pay a debt. expected to provide actual notice. electronic communications containing Final § 1006.42(a)(1) also clarifies that required disclosures. Section 1006.42 Sending Required the general standard applies when debt Disclosures Proposed § 1006.42(b)(3) would have collectors send disclosures required required a debt collector sending 568 Section 1006.42 sets forth either by the FDCPA or Regulation F. required disclosures electronically to requirements for sending the disclosures With these revisions, final permit receipt of notifications of required by the FDCPA and Regulation § 1006.42(a)(1) provides that a debt undeliverability from communications F. Proposed § 1006.42(a)(1) set forth a collector who sends disclosures providers, monitor for any such general standard for providing the required by the FDCPA and Regulation notifications, and treat any such required disclosures in writing or F in writing or electronically must do so notifications as precluding a reasonable electronically. Proposed § 1006.42(b) expectation of actual notice for that 566 provided that, to meet that standard The proposal explained the Bureau’s basis for delivery attempt. Some industry when delivering the required citing to FDCPA section 808. See id. at 23356. The Bureau addresses feedback about this basis at the commenters stated that the general disclosures electronically, a debt end of the section-by-section analysis of § 1006.42. standard in § 1006.42(a)(1) should be collector needed to either obtain a 567 For simplicity, the Bureau uses ‘‘send’’ deemed to be satisfied if a debt collector consumer’s E-SIGN consent directly throughout this section-by-section analysis, emails required disclosures to the including when describing what proposed from the consumer or comply with consumer email address that the alternative procedures in proposed provisions would have required. 568 Proposed § 1006.42 referred in certain places creditor provided to the debt collector § 1006.42(c), and needed to take certain to the disclosures required by proposed § 1006.34. and the debt collector does not receive additional steps regarding the format Final § 1006.42 instead refers in those places to the 565 a notice that the email was returned as and delivery of the communication. disclosures required by the FDCPA, as implemented undeliverable. Consumer advocates For the reasons discussed below, final by Bureau regulation, because the Bureau is not finalizing § 1006.34 at this time. The Bureau § 1006.42 focuses on the general expects that, in the Bureau’s disclosure-focused 569 Proposed comment 42(b)(2)–1 provided final rule, these references will be updated to refer examples of the types of information that a debt 565 See 84 FR 23274, 23355–67 (May 21, 2019). to § 1006.34. collector might include.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76849

stated that proposed § 1006.42(b)(3) § 1006.6(d)(4)(ii)(C) or in a prior limited- person responsible for delivery that the would be inadequate to provide debt content message left for the consumer or disclosure was not delivered.570 collectors with a reasonable expectation in an email message sent to the Proposed comment 42(e)(1)–2 specified of actual notice. These commenters consumer. The Bureau adds this that a debt collector did not mail a stated that the rule should provide that comment because the consumer’s ability disclosure to a consumer’s residential a debt collector does not have a to recognize the sender as a legitimate address if the debt collector knew or reasonable expectation of actual notice business is a factor in whether the debt should have known at the time of if the debt collector’s records do not collector has a reasonable expectation of mailing that the consumer did not indicate that the electronic message was actual notice. Particularly if the reside at that location. The Bureau is opened by the consumer. consumer has been alerted that a finalizing proposed § 1006.42(e)(1) and The Bureau determines that the specific debt collector may be sending a its accompanying commentary as new actions described in proposed communication to the consumer, as in comment 42(a)(1)–3, for the reasons and § 1006.42(b)(2) and (3) are relevant to the case of the notice described in with the revisions discussed below. the analysis regarding whether a debt § 1006.6(d)(4)(ii)(C), then the debt Some industry commenters stated the collector has a reasonable expectation of collector is unlikely to satisfy safe harbor for mail set forth in actual notice but that these factors may § 1006.42(a)(1) unless the debt collector proposed § 1006.42(e)(1) should be be viewed in light of any other relevant uses the same name that was included revised to encompass mail to a post facts and circumstances. The Bureau in the notice. office box or a consumer’s ‘‘last known therefore finalizes the text of proposed Final Comment 42(a)(1)–2 address.’’ These commenters observed § 1006.42(b)(2) and (3) as new that a consumer might move without comments 42(a)(1)–1.i and .ii, The Bureau is finalizing proposed advising the creditor or debt collector of respectively, to instead set forth relevant comment 42(a)(1)–1 as new comment the consumer’s new address. They also factors in determining whether a debt 42(a)(1)–2 and, apart from renumbering observed that some consumers use post collector has complied with the it, is finalizing it largely as proposed office boxes or commercial addresses to § 1006.42(a)(1) general standard. The with minor wording changes for receive mail (e.g., if a consumer is a Bureau also is finalizing new comment consistency with the text of final small business owner). 42(a)(1)–1.iii to provide an additional § 1006.42(a)(1). Final comment 42(a)(1)– Some consumer advocates factor. 2 thus states that a debt collector who recommended that the Bureau withdraw Specifically, final comment 42(a)(1)– sends a required disclosure in writing or the safe harbor for mail delivery set 1.i incorporates the text of proposed electronically and who receives a notice forth in proposed § 1006.42(e)(1). These § 1006.42(b)(2) and comment 42(b)(2)–1 that the disclosure was not delivered commenters stated that a debt collector to provide that a relevant factor in has not sent the disclosure in a manner may have multiple mail addresses for a determining whether the debt collector that is reasonably expected to provide consumer and stated that the Bureau’s has met the general standard in actual notice under § 1006.42(a)(1). One proposed safe harbor did not provide § 1006.42(a)(1) is whether the debt industry commenter stated that, when a sufficient guidance on how the debt collector identified the purpose of an debt collector attempts to deliver a collector should determine the required disclosure electronically and electronic communication transmitting consumer’s residential address. They the attempt is returned as undeliverable, a required disclosure by including in further stated that the proposed safe the debt collector should be able to rely the subject line the name of the creditor harbor was arbitrary and that a debt on the previously sent delivery attempt. and one additional piece of information collector could use it to claim identifying the debt, such as a truncated The Bureau believes this commenter compliance with § 1006.42(a)(1) without account number; the name of the was primarily concerned with whether doing any due diligence to ensure that original creditor; the name of any store a debt collector violates the five-day a consumer was likely to receive the brand—that is, the merchant— validation notice timing requirement set disclosure at the residential address to associated with the debt; the date of sale forth in FDCPA section 809(a) and which the debt collector mailed it. of a product or service giving rise to the proposed § 1006.34(a)(1)(i)(B)—i.e., that After considering these comments, debt; the physical address of service; the notice be sent within five days of the and because the safe harbor illustrates and the billing or mailing address on the initial communication—if the debt how a debt collector may comply with account. collector’s first attempt to deliver the § 1006.42(a)(1), the Bureau is finalizing Final comment 42(a)(1)–1.ii notice is returned as undeliverable. The the proposed safe harbor with revisions incorporates the text of proposed Bureau expects to address this issue as in new comment 42(a)(1)–3. § 1006.42(b)(3) to provide that a relevant part of its disclosure-focused final rule. Regarding industry’s concerns about factor in determining whether the debt The Bureau also expects that the proposed requirement that mail be collector has met the general standard in rulemaking to address how a debt sent to a consumer’s residential address, § 1006.42(a)(1) is whether the debt collector should redeliver the validation the Bureau does not believe that collector permitted receipt of and notice if it is returned as undeliverable. consumer harm will result from monitored for notifications of See proposed comment 34(b)(5)–1. undeliverability from communications including post office boxes in the safe providers and treated any such Final Comment 42(a)(1)–3 harbor because post office boxes are notifications as precluding a reasonable Proposed § 1006.42(e)(1) described a generally secure and private. Further, expectation of actual notice for that safe harbor for required disclosures sent some consumers may benefit from delivery attempt. by mail. Specifically, proposed 570 Proposed § 1006.42(e) set forth two safe Final comment 42(a)(1)–1.iii provides § 1006.42(e)(1) provided that a debt harbors, the first, § 1006.42(e)(1), covering provision that a relevant factor is whether the debt collector satisfied the general standard of disclosures by mail and the second, collector identified itself as the sender in § 1006.42(a)(1) if the debt collector § 1006.42(e)(2), covering provision of the validation of the communication by including a mailed a printed copy of a required notice within the body of an email that is a debt collector’s initial communication with the business name that the consumer would disclosure to the consumer’s residential consumer. The Bureau addresses proposed be likely to recognize, such as the name address, unless the debt collector § 1006.42(e)(2) in the section-by-section analysis included in the notice described in received notification from the entity or regarding proposed provisions not finalized, below.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00117 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76850 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

providing post office box addresses to address or telephone number. The 42(b) Requirements for Certain creditors and debt collectors because a Bureau received no comments objecting Disclosures Sent Electronically consumer can maintain a post office box to proposed comment 42(c)(1)–1 571 and, In its proposal, the Bureau address for receiving mail even as the apart from renumbering it, is finalizing preliminarily determined that the consumer moves and thereby changes it as proposed, with wording changes E-SIGN Act’s consumer-consent his or her residential address. The final only to reconcile its text to the Bureau’s requirements apply to certain FDCPA- safe harbor set forth in comment overall approach in final § 1006.42. required disclosures. The proposal 42(a)(1)–3 therefore encompasses a Final comment 42(a)(1)–4 thus states would have provided debt collectors consumer address that is a post office that, if a consumer has opted out of debt with a choice between two general box, unless the debt collector knows or collection communications to a delivery options for providing required should know that the consumer does particular email address or telephone disclosures electronically. The first not currently receive mail at that post option, set forth in proposed office box. However, the safe harbor number by, for example, following the § 1006.42(b)(1), was to, among other does not encompass an address that is instructions provided pursuant to requirements, comply with the E-SIGN a commercial address (e.g., if a § 1006.6(e), then a debt collector cannot Act after the consumer provided consumer is a small business owner) use that email address or telephone affirmative consent directly to the debt because the Bureau is concerned that number to send required disclosures. collector. The second option was to, including such addresses in the safe 42(a)(2) Exceptions among other requirements, comply with harbor could result in consumers the alternative procedures described in inappropriately receiving debt Proposed § 1006.42(a)(2) excepted the proposed § 1006.42(c)(1). The Bureau collection mail at their places of disclosures that would have been responds to comments regarding the employment. Nonetheless, while a required by proposed §§ 1006.6(e) and proposed alternative procedures in the commercial address is not covered by 1006.18(e) from the requirements of the final safe harbor, mail sent to such section-by-section analysis regarding proposed § 1006.42(a)(1), unless the proposed provisions that the agency is an address could satisfy the disclosure was included on a notice requirements of § 1006.42(a)(1) and be not finalizing, below. In this section-by- required by FDCPA section 809(a) or section analysis, the Bureau addresses otherwise compliant with the FDCPA § 1006.38(c) or (d)(2). The Bureau and Regulation F, depending on the comments regarding whether and how proposed to except these disclosures facts and circumstances. the E-SIGN Act’s consumer-consent The Bureau determines that it is because they do not arise under FDCPA requirements apply to certain FDCPA- unnecessary for the final safe harbor to section 809 and generally do not required disclosures. clarify how debt collectors should implicate FDCPA section 808’s Some industry commenters argued ascertain the address at which a prohibition on using unfair or that the E-SIGN Act’s consumer-consent consumer actually receives mail. Debt unconscionable means to collect or requirements do not apply to the collectors already should have methods attempt to collect any debt. The Bureau disclosures that the FDCPA and to ascertain correct addresses for received no comments objecting to Regulation F require. Some of these consumers since mailing disclosures is § 1006.42(a)(2) and is finalizing it as commenters based this argument on an not free and debt collectors generally proposed, with revisions only to assertion that debt collection may want consumers to receive such conform its text to the Bureau’s overall disclosures are not disclosures regarding disclosures. In addition, the safe harbor approach in final § 1006.42. a ‘‘transaction’’ as the E-SIGN Act only applies to a debt collector who defines that term. Others based it on an One industry commenter who mails a disclosure to the consumer’s last assertion that the FDCPA does not addressed proposed § 1006.42(a)(2) known address, and it does not cover a require the validation notice to be debt collector who knows or should requested that the final rule provide that provided in writing, because the FDCPA know that the consumer does not the intent-to-deposit letter described in permits the notice to be provided orally currently reside at, or receive mail at, proposed § 1006.22(c)(1) (implementing when it is contained in the initial that location at the time of mailing. FDCPA section 808(2)) is not subject to communication. For these reasons, final comment the E-SIGN Act’s consumer-consent Consumer advocates stated that the 42(a)(1)–3 states that, subject to requirements. Under the proposal, the rule should require a debt collector to comment 42(a)(1)–2 regarding receipt of Bureau did not take a position on obtain a consumer’s E-SIGN consent a notice of undeliverability, a debt E-SIGN coverage of the intent-to-deposit before using any method of collector satisfies § 1006.42(a)(1) if the letter and, accordingly, the Bureau does communication with the consumer debt collector mails a printed copy of a not take a position on E-SIGN’s other than mail or a telephone call. disclosure to the consumer’s last known applicability to the letter in this final These commenters observed that many address, unless the debt collector, at the rule. The Bureau is not aware that these consumers whose debts enter collection time of mailing, knows or should know notices are currently being delivered are lower-income or elderly consumers that the consumer does not currently electronically or, if they are, that there who may not be familiar with internet- reside at, or receive mail at, that are concerns or questions about based financial transactions. Further, these commenters said, even if these location. compliance with the E-SIGN Act when consumers have and can use an email sending them. The Bureau notes, Final Comment 42(a)(1)–4 address or smartphone, they may not however, that the intent-to-deposit letter The Bureau is finalizing proposed have reliable, high-bandwidth home comment 42(c)(1)–1 as new comment is subject to the notice and form internet service, such that they might 42(a)(1)–4. Proposed comment requirements of § 1006.42(a)(1). prefer to receive important financial 42(c)(1)–1 clarified that a debt collector information through the mail. These could not deliver a required disclosure 571 Consumer advocates objected to proposed commenters stated that the E-SIGN Act’s § 1006.42(c) overall and stated that the consumer’s to an email address or telephone opt-out right referred to in proposed comment consumer-consent requirements were number if a consumer had opted out of 42(c)(1)–1 was insufficient to resolve their purposefully designed to ensure that receiving communications to that objections. consumers, including lower-income and

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00118 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76851

elderly consumers, have access to a conclusion applies to the disclosures consent provided to a creditor (or to a computer and the internet such that that FDCPA section 809(b) requires to be prior debt collector) transfers to a debt they can access written disclosures mailed, which are debt collectors’ collector, and, as a result, is not electronically. responses to consumers’ requests for addressing feedback received regarding Within the E-SIGN Act’s consumer- original-creditor information (see the the Bureau’s proposed interpretation. consent requirements, E-SIGN Act section-by-section analysis of The Bureau intends to monitor debt section 101(c)(1) states that, if a statute, § 1006.38(c)) and debt collectors’ collectors’ practices for sending regulation, or other rule of law requires responses to consumers’ disputes (see required debt collection disclosures in that information relating to a transaction the section-by-section analysis of accordance with the consumer-consent or transactions in or affecting interstate § 1006.38(d)(2)(i)). The Bureau thus is requirements in E-SIGN Act section or foreign commerce be provided or finalizing proposed § 1006.42(b)(1) as 101(c), including debt collectors’ made available to a consumer in § 1006.42(b) to provide that a debt practices for obtaining that consent. writing, the use of an electronic record collector who sends the required, Proposed Provisions Not Finalized to provide or make available (whichever written validation notice, or the is required) such information satisfies disclosures required by § 1006.38(c) or Proposed § 1006.42(b)(4) and (c) the requirement that such information (d)(2)(i),574 electronically, must do so in through (e) would have set forth be in writing if (A) the consumer has accordance with the consumer-consent additional requirements, alternative affirmatively consented to such use and requirements in E-SIGN Act section procedures, notice-and-opt-out has not withdrawn such consent 101(c).575 processes, and a safe harbor for a debt ....572 In turn, E-SIGN Act section As noted above, proposed collector providing a validation notice 106(13) defines the term ‘‘transaction’’ § 1006.42(b)(1) would have required a electronically. Collectively, these quite broadly.573 The Bureau concludes debt collector to obtain E-SIGN consent provisions, along with proposed that transaction—as E-SIGN Act section directly from consumers when the debt § 1006.42(b) in general, prescribed 101(c)(1) uses that term and as E-SIGN collector provided electronically the various methods for a debt collector to Act section 106(13) defines it—includes validation notice or the disclosures deliver a validation notice either in the the collection of debts by debt required by § 1006.38(c) and (d)(2). body of an email or through a hyperlink, collectors. Some industry commenters in the initial communication with the Further, FDCPA section 809(a) states recommended that the Bureau take a consumer or within five days of the initial communication. that ‘‘a debt collector shall . . . send the different approach and interpret E-SIGN The Bureau received thousands of consumer a written [validation] notice’’ Act section 101(c) to permit a comments concerning both the overall unless it is contained in the initial consumer’s E-SIGN consent obtained by approach and details of these communication. Under the above terms a creditor to pass from the creditor (or provisions. While many industry of E-SIGN Act section 101(c)(1), the a prior debt collector) to the debt commenters supported the Bureau’s E-SIGN Act consumer-consent collector. Consumer advocates, by attempt to provide clarity, such requirements apply when a law requires contrast, supported the Bureau’s commenters were also concerned about a written disclosure to a consumer. And proposed approach. In these what they considered to be the the Bureau has determined that FDCPA commenters’ view, a consumer’s E-SIGN prescriptive and burdensome nature of section 809(a) sets forth a requirement consent applies only ‘‘during the course the proposal. These commenters that a debt collector provide a written of the parties’ relationship’’ per E-SIGN suggested that, if finalized, the proposed disclosure of information to a consumer; Act section 101(c)(1)(B)(ii). Further, procedures would not lead to the clarity i.e., the Bureau has determined that the these commenters stated, collection or increased use of electronic delivery validation notice required by FDCPA activity by third-party debt collectors to that the Bureau expected. Consumer and section 809(a) is a disclosure of which the FDCPA applies is not within consumer advocate commenters information to a consumer and that the relationship between the consumer objected to the Bureau’s proposal, FDCPA section 809(a) requires the and the original creditor. arguing that, even with prescriptive validation notice to be in writing when The Bureau is not finalizing in procedures, the Bureau’s proposal failed it is not contained in the initial § 1006.42(b) the proposed E-SIGN Act to adequately safeguard consumers from communication. Accordingly, when a interpretation that a debt collector who threats present in electronic debt collector provides the required, provides electronically the written communications and to ensure that written validation notice electronically disclosures required by the FDCPA and consumers would have a reasonable and does so other than within the initial Regulation F must obtain a consumer’s likelihood of receiving such communication, the E-SIGN Act’s affirmative consent directly from the communications. consumer-consent requirements apply consumer. That is to say, the Bureau is For the reasons discussed below, the to the debt collector’s electronic not taking a position in this rulemaking Bureau is not finalizing the following provision of the notice. The same on whether a consumer’s E-SIGN specific procedures and safe harbors. The Bureau emphasizes, however, that 572 As discussed elsewhere in part V, E-SIGN Act 574 As discussed in the section-by-section analysis it concludes that consumers may benefit section 104(b)(1) grants Federal agencies authority of § 1006.38(d)(2), the Bureau has determined not to interpret E-SIGN Act section 101, including to apply the E-SIGN Act’s consumer-consent from electronic communications in debt section 101(c). requirements when a debt collector responds collection, including the delivery of 573 E-SIGN Act section 106(13) defines transaction electronically to a dispute that the debt collector required notices, as consumers may be as ‘‘an action or set of actions relating to the has determined is duplicative. Thus, final able to exert greater control over such conduct of business, consumer, or commercial § 1006.42(b) refers to the disclosures required by affairs between two or more persons, including any ‘‘§ 1006.38(c) or (d)(2)(i)’’ rather than ‘‘§ 1006.38(c) communications than over non- of the following types of conduct—(A) the sale, or (d)(2)’’ as proposed. electronic communications and those lease, exchange, licensing, or other disposition of (i) 575 As discussed elsewhere in the section-by- communications may be more easily personal property, including goods and intangibles, section analysis of § 1006.42, the Bureau is moving retained and referenced by consumers. (ii) services, and (iii) any combination thereof; and proposed § 1006.42(b)(2) and (3) into commentary (B) the sale, lease, exchange, or other disposition of to final § 1006.42(a)(1) and is not finalizing The Bureau also concludes that debt any interest in real property, or any combination proposed § 1006.42(b)(4). The Bureau therefore is collectors may find electronic delivery thereof.’’ See 15 U.S.C. 7006(13). finalizing proposed § 1006.42(b)(1) as § 1006.42(b). of required notices to be a more effective

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76852 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

and efficient means of communicating currently lacks sufficient information to proposed § 1006.42(d)(2), the notice- with consumers. properly balance the risks and benefits and-opt-out process would have relied Nevertheless, because debt collectors of rules for electronic delivery of on a communication between the do not presently engage in widespread required disclosures. Accordingly, the creditor and the consumer.577 use of electronic communications, as Bureau is declining at this time to As noted above, some industry discussed in the section-by-section finalize the proposal to require that the commenters argued that the E-SIGN analysis of § 1006.6(d)(3) through (5), validation notice be provided in a Act’s consumer-consent requirements and in light of commenters’ concerns, responsive format. should not apply to the written the Bureau concludes that it does not, Alternative procedures to the E-SIGN disclosures required under the FDCPA at this time, have sufficient information Act for providing certain disclosures and Regulation F. Some industry to properly weigh the risks to electronically. As noted in the section commenters suggested that, if the consumers and benefits to debt by-section analysis of § 1006.42(b), Bureau were to determine that the collectors to finalize specific procedures proposed § 1006.42(c) provided E-SIGN Act’s consumer-consent for electronic delivery of required alternative procedures that debt requirements do apply, then the Bureau disclosures. The Bureau determines that collectors sending certain required should use its exemption authority, finalizing other communications disclosures electronically could have provided by E-SIGN Act section provisions will encourage both debt used in lieu of sending the disclosures 104(d)(1), to exempt from the E-SIGN collectors and consumers to in accordance with E-SIGN Act section Act’s consumer-consent requirements communicate electronically when they 101 and obtaining affirmative consent the disclosures that the FDCPA requires prefer to do so. The Bureau intends to directly from the consumer, as proposed to be in writing. E-SIGN Act section actively monitor the market and gather § 1006.42(b)(1) otherwise would have 104(d)(1) states that a Federal agency information on these electronic required. In the context of those may exempt required written communications in general so that it alternative procedures, proposed disclosures from the may, in the future, revisit specific § 1006.42(c)(2) provided two methods E-SIGN Act’s consumer-consent procedures for electronic delivery of from which debt collectors could choose requirements if the agency determines required disclosures. for placing a required disclosure in an that ‘‘such exemption is necessary to Responsive format for validation electronic communication. The first eliminate a substantial burden on notices sent electronically. Proposed method, as described in proposed electronic commerce and will not § 1006.42(b)(4) would have required a § 1006.42(c)(2)(i), was to place the increase the material risk of harm to debt collector who provides a validation disclosure in the body of an email. The consumers.’’ Industry commenters notice electronically to do so in a second method, described in proposed stated that the responsive format that is reasonably § 1006.42(c)(2)(ii), was to place the E-SIGN Act’s consumer-consent expected to be accessible on a screen of disclosure on a secure website that is requirements impose a substantial any commercially available size and via accessible by clicking on a hyperlink burden on electronic commerce in the commercially available screen readers. included within an electronic debt collection industry because it is Those industry commenters who communication, provided certain other infeasible for a debt collector to obtain addressed the proposed responsive conditions were met. Among those a consumer’s E-SIGN consent prior to format requirement in proposed conditions was that the consumer electronically delivering the validation § 1006.42(b)(4) generally stated that it receive notice and an opportunity to opt notice to the consumer. would be too burdensome and out of hyperlinked delivery as set forth Industry commenters generally based prescriptive. A few industry this position on the same rationale that commenters supported the proposed in proposed § 1006.42(d). Proposed § 1006.42(d) described two underpinned the Bureau’s proposal to requirement. exempt from the E-SIGN Act’s Consumer advocates generally processes for providing consumers with notice and an opportunity to opt out of consumer-consent requirements supported proposed § 1006.42(b)(4). required disclosures sent pursuant to They stated that responsive formats for hyperlinked delivery of required disclosures. Proposed § 1006.42(d)(1) the alternative procedures in proposed required disclosures serve an important § 1006.42(c). Specifically, these goal of readability on mobile devices. required a debt collector to inform the consumer, in a communication with the commenters stated, it is not practicable These commenters encouraged the to obtain a consumer’s E-SIGN consent Bureau to follow through on its proposal consumer before providing the required to release source code that collectors disclosure, of certain information which included requiring the debt collector to decision in order to grant sufficient time for the could use to provide electronically sent consumer to see and respond to the opt-out notice. validation notices in a responsive inform the consumer of the consumer’s And because, under FDCPA section 809(a), no more format. While a group of State Attorneys ability to opt out of hyperlinked than five days may elapse between an initial debt collection communication and when the debt General supported the responsive- delivery of disclosures and to provide instructions for doing so within a collector sends the validation notice, under format requirement, they stated that, if proposed comment 42(d)(1)–3, a debt collector who 576 a responsive disclosure is magnified on reasonable period of time. Under wished to obtain consumer consent in an initial a small screen, a consumer can read communication to hyperlinked delivery of the 576 Proposed comment 42(d)(1)–3 would have validation notice would have been required to only one small section of the disclosure clarified how the proposed requirement to obtain the consumer’s consent to such delivery at a time, which can result in communicate with the consumer before providing orally. information being overlooked or taken a hyperlinked disclosure worked together with the 577 Under proposed § 1006.42(d)(2), a debt out of context notwithstanding that the proposed requirement to provide the consumer a collector would have been required, no more than reasonable period within which to opt out. The 30 days before the debt collector’s electronic disclosure includes the requisite proposed comment explained that, in an oral communication containing the hyperlink to the information. communication with the consumer, such as a disclosure, to confirm that the creditor: (1) As discussed above, the Bureau is not telephone or in-person conversation, the debt Communicated with the consumer using the email finalizing many of the proposed collector may require the consumer to make an opt- address or, in the case of a text message, the out decision during that same communication. telephone number to which the debt collector requirements or safe harbors related to However, in a written or electronic communication, intends to send the electronic communication, and electronic delivery of required a debt collector would have had to allow a (2) informed the consumer of the information set disclosures because the Bureau consumer more than five days to make an opt-out forth in proposed § 1006.42(d)(2).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00120 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76853

through the mail or during a telephone apply or that the Bureau should lacks evidence to assess and finalize call, which are the primary methods by establish a blanket exemption from other possible alternative procedures. which debt collectors make initial those requirements. Accordingly, the Bureau is not communications to consumers. Further, Consumer advocates objected to the E- finalizing proposed § 1006.42(c) or these commenters stated, it is difficult SIGN Act exemption in proposed otherwise establishing an exemption or impossible to obtain consumers’ § 1006.42(c). These commenters stated from the E-SIGN Act’s consumer- E-SIGN consent in the five days between that the proposal failed to satisfy the consent requirements at the present when the debt collector makes an initial two conditions that E-SIGN Act section time. As discussed above, the final communication in a telephone call and 104(d)(1) requires an agency to meet rule—as reflected in § 1006.42(b)—thus when FDCPA section 809(a) provides when establishing an exemption from requires a debt collector who provides that the debt collector must provide the the E-SIGN Act’s consumer-consent electronically the written disclosures validation notice (unless the validation provisions. Specifically, consumer required by the FDCPA and Regulation notice is contained in the initial advocates stated that the proposal failed F to do so in accordance with the E- communication). Finally, these to show that (i) electronic commerce is SIGN Act’s consumer-consent commenters stated, debt collectors substantially burdened by requiring requirements. generally do not have ongoing customer debt collectors to obtain E-SIGN consent The Bureau also declines to finalize at relationships with the consumers from and that (ii) the proposed exemption the present time the requirements for whom the debt collectors seek debt would not materially increase the risk of hyperlinked delivery of required repayment, such that it is difficult or harm to consumers. disclosures that were proposed as part impossible for debt collectors to use the Regarding hyperlinks, consumer of the alternative procedures. The practices for obtaining E-SIGN consent advocates observed that Federal Bureau believes that the consumer risks that creditors typically use. agencies have advised consumers from clicking on hyperlinks in While some industry commenters against clicking on hyperlinks in electronic communications from argued that the Bureau should use its electronic communications from senders that consumers might not exemption authority, some also unrecognized senders. They stated that recognize warrant additional expressed concern with the specifics of the proposed procedures for consideration by the Bureau 580 and the the Bureau’s proposed exemption, hyperlinked delivery of required Bureau intends to continue to monitor arguing that the proposal in § 1006.42(c) disclosures failed to provide reasonable and gather information on electronic to permit debt collectors to use email assurance that an electronic debt communications use in debt collection addresses or telephone numbers that the collection communication with a and, if applicable, use of hyperlinks in creditor could have used in accordance hyperlink would not be sent to spam or debt collection communications. In the with section 101(c) of the E-SIGN Act that the consumer would recognize the absence of the proposed requirements, was not sufficient. These commenters communication and be comfortable the final rule does not prohibit a debt stated that, in many cases, a creditor clicking on a hyperlink within it. They collector from sending required would not have a consumer’s E-SIGN stated that the Bureau’s rule should not disclosures electronically through consent but would have the consumer’s permit required debt collection hyperlinks (or with accompanying email address or telephone number (for disclosures to be sent through hyperlinks), provided that the debt text messages). For example, these hyperlinks in emails or text messages. collector complies with the commenters said, the creditor might use For all of these reasons, consumer requirements of the FDCPA and the email address or telephone number advocates recommended that the Bureau Regulation F and other applicable law. to provide non-required messages and withdraw proposed § 1006.42(c). However, the final rule also does not notifications to consumers, for which After considering feedback, the provide a safe harbor for a debt collector the consumers’ E-SIGN consent is not Bureau believes that it currently lacks to use hyperlinks to provide required required. To enable debt collectors to sufficient information to properly assess disclosures electronically.581 As noted interact efficiently with consumers in the risks and benefits of the alternative above, § 1006.42(a)(1) provides, in part, these situations, these commenters said, procedures in proposed § 1006.42(c) vis- that a debt collector who sends the Bureau should provide an E-SIGN a`-vis the exemption criteria in E-SIGN disclosures required by the FDCPA or Act exemption and revise the alternative Act section 104(d)(1), which, as noted procedures in proposed § 1006.42(c) to above, are that ‘‘such exemption is notices through the mail and less consumer permit a debt collector to send required willingness to receive validation notices by email necessary to eliminate a substantial or text message. See CFPB Quantitative Testing disclosures electronically to the burden on electronic commerce and will Report, supra note 33, at 32–33. consumer’s email address or telephone not increase the material risk of harm to 580 As the Bureau noted in the proposal, the FTC number (for text messages) that the advises consumers not to clink on links or consumers.’’ For the reasons the Bureau attachments in unsolicited electronic creditor provided to the debt collector, set forth in its proposal,578 the Bureau irrespective of whether the creditor or communications from senders they do not concludes that the E-SIGN Act’s recognize, in order to prevent phishing and the debt collector obtained the consumer-consent requirements do pose malware. See 84 FR 23274, 23363 (May 21, 2019); consumer’s E-SIGN consent. a substantial burden on electronic Fed. Trade Comm’n, How to Recognize and Avoid Industry commenters also stated that Phishing Scams (July 2017), https:// commerce in the debt collection the requirements in proposed www.consumer.ftc.gov/articles/how-recognize-and- context. The Bureau also concludes, avoid-phishing-scams; Fed. Trade Comm’n, § 1006.42(c)(2)(ii) and (d) regarding however, that it does not have sufficient Malware (Nov. 2015), https:// provision of required disclosures www.consumer.ftc.gov/articles/0011-malware. The evidence to establish that the proposed through hyperlinks in emails or text FDIC offers consumers similar guidance. See Fed. exemption and alternative procedures Deposit Ins. Corp., Beware of Malware: Think messages were far too prescriptive and Before You Click, https://www.fdic.gov/consumers/ burdensome and would not be used. would not increase the material risk of harm to consumers.579 The Bureau also consumer/news/cnwin16/malware.html (last They generally did not, however, updated Mar. 8, 2016). suggest alternatives to those procedures 581 In this regard, see the discussion of Lavallee 578 84 FR 23274, 23361 (May 21, 2019). because, as noted above, their main v. Med-1 Solutions in the section-by-section 579 Moreover, quantitative testing completed by analysis below addressing the Bureau’s decision not argument was that the E-SIGN Act’s the Bureau after publication of the proposal shows to finalize a safe harbor for validation notices sent consumer-consent requirements do not consumer preference for receiving validation in the body of an electronic initial communication.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00121 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76854 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Regulation F in writing or electronically With respect to the form of the collector may electronically deliver the must, among other things, do so in a communication, some industry validation notice information within the manner that is reasonably expected to commenters stated that the safe harbor debt collector’s initial communication provide actual notice. Final comment should include delivery of the to a consumer without obtaining the 42(a)(1)–1 provides relevant factors for validation notice in the initial consumer’s E-SIGN consent.586 determining whether a debt collector communication through a text message. The Bureau also has determined that has met this requirement. Others stated that the safe harbor should the validation notice information Safe harbor for validation notices sent include initial communication emails (whether or not contained in the initial in the body of an electronic initial- that have the validation notice as a communication) is a disclosure required communication. Proposed portable document format (PDF) by the FDCPA. Accordingly, the general § 1006.42(e)(2) provided that a debt attachment. And others stated that the standard in final § 1006.42(a)(1)—that a collector satisfied the notice and safe harbor should expressly permit the required disclosure be sent in a manner retainability requirements of body of initial communication emails to that is reasonably expected to provide § 1006.42(a) if the debt collector include both the validation notice and actual notice and in a form that the delivered a validation notice in the body hyperlinks to debt collector websites. consumer may keep and access later— of an email that was the debt collector’s Consumer advocates recommended applies when a debt collector sends the initial communication with the that the Bureau withdraw the email safe validation notice information consumer and satisfied certain other harbor set forth in proposed electronically within the initial conditions. The debt collector could § 1006.42(e)(2). These commenters communication. The commentary either (i) satisfy the requirements of stated that the proposed procedures for discussed in the section-by-section proposed § 1006.42(b) for delivering obtaining consumers’ email addresses analysis of § 1006.42(a)(1) clarifies the validation notices electronically, which set forth in proposed § 1006.6(d)(3) general standard. included obtaining the consumer’s E- would not reliably result in the However, because email SIGN consent; or (ii) satisfy the validation notice information, contained communications in general are not requirements of the proposed alternative within the emailed initial widely used in debt collection procedures in § 1006.42(c) discussed communication, actually reaching the currently, the Bureau lacks evidence to above (except that proposed consumer and could result in disclosure show that a debt collector sending an § 1006.42(e)(2) would have permitted of sensitive information to third parties. email pursuant to the proposed safe debt collectors to send the validation These commenters stated that the harbor would have a reasonable notice to a potentially broader set of proposal failed to provide a rational expectation of actual notice to the email addresses than proposed explanation of whether consumers consumer. The Bureau is thus declining § 1006.42(c) would have permitted). would reliably receive the emailed to finalize the proposed safe harbor. Some industry commenters suggested initial communication. The absence of the proposed safe that the safe harbor set forth in proposed Having considered the comments, the harbor from the final rule does not § 1006.42(e)(2) be expanded in certain Bureau declines to finalize the safe preclude debt collectors from using ways, while others criticized it as being harbor for email delivery of the email to deliver the validation notice overly complicated and burdensome.582 validation notice information within the information electronically within the Industry commenters generally stated initial communication. The Bureau has initial communication if the debt that the safe harbor should be expanded determined that the FDCPA does not collector is able to satisfy the through changes to the procedures for require the validation notice requirements of the FDCPA and selecting an email address in proposed information to be provided in writing Regulation F, in particular the § 1006.6(d)(3). For example, these when it is contained in the initial requirement that the communication be commenters stated that the safe harbor communication.584 The Bureau has should include any email address or therefore also determined that the E- the Bureau is not imposing such a requirement SIGN Act’s consumer-consent through Regulation F, the Bureau has also telephone number that the consumer determined that the E-SIGN Act’s consumer-consent has provided to, or confirmed with, the requirements do not apply to a debt requirements do not apply to electronic delivery of creditor, debt collector, or other person collector’s electronic delivery of the the validation notice information when it is for purposes of receiving validation notice information within the contained in the initial communication. 586 communication about the account, debt collector’s initial communication In Lavallee v. Med-1 Solutions, the United to a consumer.585 Accordingly, a debt States Court of Appeals for the Seventh Circuit held including a consumer’s employer- that the emails sent by Med-1 Solutions to Lavallee provided email address if that is the did not meet the FDCPA’s requirements for email address that the consumer understand that they do not have an expectation of electronic delivery of the validation notice 583 privacy from their employers for their employer- information within an initial communication provided to the creditor. provided email account when they provide because the emails did not ‘‘contain’’ the validation employer-provided email addresses to creditors. notice information. Lavallee v. Med-1 Solutions, 582 Some industry commenters did object to the 584 FDCPA section 809(a) permits the validation LLC, 932 F.3d 1049 at 1055 (7th Cir. 2019). The safe harbor, but these commenters misunderstood notice information to be contained in the initial court observed that, to access the validation notice the proposal as requiring a debt collector to obtain communication. In turn, FDCPA section 807(11) information, the consumers receiving the emails a consumer’s E-SIGN consent when the debt indicates that the initial communication with the had to complete multiple, discrete tasks and ‘‘[a]t collector delivers the validation notice in the body consumer may be oral. Accordingly, the Bureau best, the emails provided a digital pathway to of an email that was the debt collector’s initial interprets the FDCPA as not requiring that the access the information.’’ Id. at 1055–56. Under the communication with the consumer. Instead, as validation notice information be provided in specific facts of that case, the Bureau agrees with noted above, the proposed safe harbor included writing when it is contained in the initial the Seventh Circuit that the electronic delivery delivery without E-SIGN consent (per the communication. procedures used by Med-1 Solutions did not satisfy alternative procedures set forth in proposed 585 The E-SIGN Act’s consumer-consent the requirement in FDCPA section 809(a) that the § 1006.42(c)) of an email to an email address that requirements apply only when a ‘‘statute, initial communication ‘‘contain’’ the validation the debt collector selected through the procedures regulation, or other rule of law’’ requires that a notice information. Nonetheless, the Bureau described in proposed § 1006.6(d)(3)). disclosure be provided in writing. See E-SIGN Act believes that a debt collector may properly provide 583 As also discussed in the section-by-section section 101(c)(1) (15 U.S.C. 7001(c)(1)). Because the the validation notice information to a consumer analysis of § 1006.22(f)(3), these commenters stated Bureau has determined that the FDCPA does not within the debt collector’s electronic initial that, while it may be true that a consumer’s require that the validation notice information be communication with the consumer, provided that employer can access emails sent to the consumer’s provided in writing when it is contained in the the communication ‘‘contains’’ the validation notice employer-provided email addresses, consumers initial communication (see previous footnote) and information.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00122 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76855

sent in a manner that is reasonably § 1006.100(a) to require a debt collector Running of Retention Period expected to provide actual notice and in to retain evidence of compliance with Industry commenters suggested a a form that the consumer may keep and Regulation F starting on the date that number of alternatives to, or requested access later. The Bureau will monitor the debt collector begins collection clarity regarding, the Bureau’s proposal whether debt collectors who activity on a debt and ending three years to tie the running of the retention period electronically provide validation notice after: (1) The debt collector’s last to (at the debt collector’s option) either information within initial communication or attempted the date of the debt collector’s last communications do so in a manner that communication in connection with the communication or attempted does not violate these requirements. collection of the debt; or (2) the debt is communication regarding the debt or As noted above, the Bureau is settled, discharged, or transferred to the the date that the account was settled, finalizing § 1006.42, including debt owner or to another debt collector. transferred, discharged or otherwise § 1006.42(a)(1), to implement and The proposed commentary would have closed.590 First, some industry interpret FDCPA section 809(a) and (b) clarified certain details, including that commenters suggested that the proposed and pursuant to its authority under nothing in the proposed record retention period should run from the FDCPA section 814(d) to prescribe rules retention provision required a debt debt collector’s last communication or with respect to the collection of debts by collector to record telephone calls, but attempted communication with the debt collectors. that, if a debt collector recorded consumer rather than, as proposed, with The Bureau is also finalizing telephone calls, the debt collector anyone. These commenters asserted that § 1006.42(a)(1) to implement and needed to retain the recordings if the the purpose of the FDCPA is to protect interpret FDCPA section 808’s recordings were evidence of compliance consumers from unfair, deceptive, and prohibition on using unfair or with Regulation F.588 To address abusive debt collection practices by debt unconscionable means to collect a debt. feedback received, the Bureau is collectors and that a record retention A few industry commenters objected to finalizing § 1006.100(a) with revisions requirement based on a debt collector’s the proposal’s initial conclusion that it and is adding new § 1006.100(b) to last communication or attempted may be unfair or unconscionable under create a special rule regarding retention communication with a consumer would FDCPA section 808 for a debt collector of telephone call recordings. be more consistent with this statutory to deliver a disclosure using a method 100(a) purpose than the proposed approach of that is not reasonably expected to the last communication with anyone. provide actual notice to the consumer or Industry commenters expressed Other industry commenters stated that that does not allow the consumer to concern regarding the potential burden the definitions of ‘‘communication’’ and retain the disclosure and access it of a retention requirement, especially ‘‘attempted communication’’ should be later.587 These commenters argued that for smaller debt collectors. Both clarified for purposes of the rule’s it is not unfair or unconscionable to industry and consumer advocate record retention requirement. send an electronic notice to a consumer commenters offered suggestions on how Second, industry commenters stated that the debt collector has no reason to the proposed requirement should be that, with respect to many accounts, a believe is addressed incorrectly or will modified, as follows. debt collector will undertake initial be returned. collection activity soon after receiving Trigger To Begin Retaining Records The Bureau concludes that the the account, but the account might then proposal’s analysis under FDCPA As proposed, the final rule’s record sit dormant for months or years before section 808 is consistent with these retention provision would have required being settled, transferred, discharged, or commenters’ position. Whether a debt a debt collector to begin retaining otherwise closed on the debt collector’s collector has a reasonable expectation of records ‘‘on the date that the debt books.591 These commenters stated that, actual notice depends upon the specific collector begins collection activity on a as proposed, there would be uncertainty facts and circumstances, which may debt.’’ Most commenters who addressed and burden associated with maintaining include the debt collector’s knowledge the issue stated that that requirement records for dormant accounts for time concerning the accuracy of the provides sufficient clarity. Some periods potentially well beyond three electronic address used or knowledge consumer advocate commenters years from the last collection activity on regarding the likelihood that the suggested that the retention period the accounts because the accounts have electronic communication will be begin as soon as a debt collector obtains not been closed. To alleviate this returned. As proposed, therefore, the a debt from a creditor (or prior debt problem, some industry commenters Bureau is finalizing § 1006.42(a)(1) as, collector)—as opposed to, as proposed, suggested that the final rule’s record among other things, an interpretation of when collection activity begins—so that retention requirement should require FDCPA section 808’s prohibition on the debt collector retains evidence debt collectors to retain records for three using unfair or unconscionable means to relevant to disparate impacts in who the years from the earlier of the date of the collect a debt. debt collector targets for collection or last communication or the date on which the account is closed. Subpart C—Reserved for particular types of collection. The Bureau declines to start the record Third, some industry commenters, as Subpart D—Miscellaneous retention requirement at the time the well as the U.S. SBA Office of Section 1006.100 Record Retention debt collector obtains the debt.589 The Bureau therefore is finalizing 590 In addition to the comments discussed in this For the purpose of promoting the section-by-section analysis, commenters raised effective and efficient enforcement and § 1006.100(a) to provide, as proposed, concerns about the unique record retention burdens that a debt collector must begin to retain associated with telephone call recordings. The supervision of Regulation F, the Bureau Bureau discusses those comments in the section-by- proposed in § 1006.100 to require a debt records on the date that collection activity begins on a debt. section analysis of § 1006.100(b) below, and collector to retain evidence of addresses retention of all other types of records compliance with Regulation F. here. 588 See 84 FR 23274, 23367–68 (May 21, 2019). 591 Some commenters suggested that the record Specifically, the Bureau proposed in 589 Regulation B, 12 CFR 1002, which implements retention provision in the regulation refer to the the Equal Credit Opportunity Act, imposes its own date on which an account is ‘‘closed’’ rather than 587 See 84 FR 23274, 23356 (May 21, 2019). record retention requirements. ‘‘transferred.’’

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00123 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76856 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Advocacy, requested more clarity as to receive comments on the benefit or three-year period should be amended to when the three-year retention clock burden of such a requirement. For these be ‘‘at least’’ or ‘‘no less than’’ three would start to run. Some of these reasons, the Bureau is finalizing years to clarify that maintaining records commenters noted that, for discharged § 1006.100(a) to provide that, except for for more than three years would not be debts, it was not clear from the proposal telephone call recordings (as discussed a violation. whether the retention requirement in the section-by-section analysis of Many consumer advocates stated that would run from the date of the § 1006.100(b)), the retention period the record retention period should be discharge or of some later terminal begins to run on the date of the last longer than three years. Some consumer event. Others stated that the proposal collection activity on the account. Final advocates stated that the retention was unclear whether, if there is a comment 100(a)–4 provides clarity period should last at least as long as a judgment, the three-year period runs regarding when the last collection debt collector might continue collection from the final court order, the date that activity on an account occurs and, thus, attempts. Others said that it should be the judgment is paid, or the date the when the three-year record retention seven years, paralleling the length of account is closed. Separately, some clock starts to run. The Bureau time that information generally may stay industry commenters stated that the determines that having the retention in consumer credit reports under the date of initiating collection activity period begin to run with the last FCRA and the time periods for actions sufficiently set forth the expectation for collection activity on the account strikes under certain State laws. Others when debt collectors should start the right balance between encompassing recommended that the rule clarify that retaining records with respect to an the activities and documents necessary debt collectors who furnish information account. to adequately supervise and enforce the to consumer reporting agencies Some consumer advocates likewise requirements of the FDCPA and pursuant to the FCRA also must comply requested that the date on which the Regulation F, providing sufficient with the recordkeeping requirements of three-year retention clock starts to run clarity for compliance, and not being the FCRA. be more definitive. These commenters overly burdensome. For the reasons discussed below, the suggested that the three-year period run The Bureau declines to base the Bureau has decided to finalize a three- from the time at which a debt collector running of the retention period, as year record retention period, as sends a notice to the consumer stating suggested by industry commenters, on proposed. First, as to comments about that the debt has been fully paid or the debt collector’s last communication the FDCPA’s ‘‘one-year statute of settled, or extinguished, or that the debt with the consumer. Nothing in the limitations,’’ the Bureau notes that that collector has ceased all collection statute’s statement of its purposes in timeframe refers to FDCPA section activities related to the debt. These FDCPA section 802(e) suggests that the 813(d), which applies only to private commenters stated their belief that most statute’s protections are limited to debt actions brought under the FDCPA. debt collectors do not currently provide collectors’ communications with FDCPA section 814(b) and (c) set forth such final notices today and suggested consumers. Further, the FDCPA’s the basis for Federal agencies, including that the Bureau require such notices to protections against harassment or abuse the Bureau, to bring administrative provide clarity to consumers and to (FDCPA section 806), false or enforcement actions for violations of the trigger the start of the three-year record misleading representations (section FDCPA. The Bureau also declines to retention clock. 807), and unfair practices (section 808) make the Regulation F retention period The Bureau agrees that, as proposed, are not limited to communications or match the period set forth in the record retention requirement could activities directed to the consumer Regulations X and Z (two years), have imposed an unintended burden as alleged to owe a debt. For example, because those regulations implement a result of the variability of the length FDCPA section 806 states that a debt statutes (respectively, RESPA and the of the life cycles of various debt collector may not harass, oppress, or Truth in Lending Act 592) that serve collection accounts and the long abuse ‘‘any person’’ in connection with different purposes than the FDCPA. The dormancy of many accounts after the the collection of a debt. Finally, the Bureau also declines to adopt a record first communication (and related initial FDCPA’s limitations on acquisition of retention time period longer than three activity). The Bureau, however, declines location information (FDCPA section years because retention for such a time to address these concerns by taking the 804) and communication with third period is unnecessary for effective suggested approach of making the three- parties (section 805(b)) are specifically supervision and enforcement and is not year retention period run from the targeted at communications with typical under the consumer financial earlier of the last communication or the persons other than the consumer. services laws. closure of the debt file. If debt file A three-year retention period will closure occurred prior to the last Length of Retention Period provide the Bureau and other Federal communication, such an approach Industry commenters expressed and State enforcement agencies with a could result in the debt collector not differing views as to the proposed three- sufficient but limited amount of time to being required to retain the record of the year record retention period. Some examine and conduct enforcement last communication for a sufficient time commenters stated that the proposed investigations. In addition, it will to permit effective supervision and period strikes the right balance between facilitate effective supervisory enforcement, because the three-year cost and burden on the one hand and examinations, which depend critically retention period would have begun to the need to ensure adequate supervision on having access to the information run upon closure of the debt file. The and enforcement on the other. Some necessary to assess operations, Bureau also declines to require, as stated that the period should be one activities, practices, and legal suggested by some consumer advocate year, consistent with the FDCPA’s one- compliance. If the record retention commenters, a debt collector to provide year statute of limitations. Other period were reduced, it could be a notice to a consumer that the debt industry commenters recommended that considerably more difficult to ensure collector has ceased all collection the retention period be two years, that the necessary information and activity with respect to a debt. The consistent with Regulation X, 12 CFR records would remain routinely Bureau did not propose such a 1024, and Regulation Z, 12 CFR 1026. requirement and therefore did not Others suggested that the proposed 592 15 U.S.C. 1601 et seq.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76857

available for proper supervisory Regulation V record retention guideline, ‘‘encompass[ed] all records the debt oversight of debt collectors. The Bureau since that guideline specifically collector relied upon for the information is in a position to evaluate such issues incorporates ‘‘any applicable in the validation notice and to support from its near-decade of experience recordkeeping requirement.’’ Under the claims of indebtedness, for example, the exercising supervision and enforcement final rule, there are no consumer debts information the debt collector obtained authority over the debt collection or record types associated with those before beginning to collect, the industry.593 That experience supports debts for which the rule requires record representations the debt collector the conclusion that a three-year record retention for more than three years received from the creditor before retention period is necessary and beyond the last collection activity. The beginning to collect, and the records the warranted. final rule therefore does not preclude debt collector relied upon in responding The Bureau also concludes that a debt collectors from adopting policies to a dispute.’’ 597 three-year retention period will not and procedures under which records are As the Bureau intended with its impose an undue cost or burden on debt deleted three years after the last proposal to require a debt collector to collectors, particularly when viewed in collection activity on an account. retain ‘‘evidence of compliance,’’ the light of the marginal difference in cost However, if a debt collector deletes an final rule clarifies that a debt collector or burden between, for example, a two- account’s records (other than call must retain records that are evidence of year period and a three-year period. recordings, which are discussed below) compliance or noncompliance with the Based on the comments received and its at that time, then a violation of the FDCPA and Regulation F, which own experience in supervision and law record retention provision would occur includes records that evidence that the enforcement, the Bureau concludes that if the debt collector undertook any debt collector refrained from conduct many debt collectors have already further collection activity with respect prohibited by the FDCPA and incorporated record retention policies to that account.595 Moreover, the Bureau Regulation F. See final comment 100(a)– and procedures into their budgets and concludes it is clear that a debt collector 1. The Bureau declines, however, to go daily operations and already maintain must have (or have access to) records further and to apply the final rule’s records for a sufficient length of time to reasonably substantiating its claim that record retention requirement to all of comply with the time period in the final a consumer owes a debt in order to the types of records that were described rule. The Bureau also determines that a avoid engaging in deceptive or unfair in the Bureau’s 2016 SBREFA Outline. three-year retention period is unlikely to collection practices in violation of the At that time, the Bureau was impose undue burden on debt collectors FDCPA when it attempts to collect the considering a broader set of possible because it is increasingly common, even debt.596 Thus, records reasonably regulatory provisions, pursuant to legal for smaller entities, to maintain records substantiating a debt collector’s claim authorities including the Bureau’s electronically either on their own that a consumer owes a debt are records Dodd-Frank Act section 1031 unfair, computers or using ever cheaper cloud that are evidence of compliance or non- deceptive, or abusive or acts or practices storage options. compliance with the FDCPA and (UDAAP) authority, which could have The Bureau agrees with consumer Regulation F. As a result, although the applied to parties including creditors, advocate commenters that debt record retention requirement does not and which could have resulted in collectors who are furnishers under the mandate retention of any records creditors being required to ensure that FCRA must also, in addition to beyond three years after the debt they pass complete and accurate complying with the Regulation F record collector’s last collection activity on the information about consumer debts to retention requirement, comply with the debt, restarting debt collection activity debt collectors. In contrast, the Bureau recordkeeping requirements of the at any time would mean that the last is now adopting a final rule, pursuant FCRA. In particular, Regulation V, 12 collection activity on the debt had not primarily to its FDCPA authority,598 that CFR part 1022, requires furnishers to yet occurred. is narrower in scope and that applies incorporate its guideline to ‘‘maintain[ ] only to FDCPA debt collectors. Records To Be Retained records for a reasonable period of time, Accordingly, the Bureau determines that not less than any applicable Consumer advocates generally the record retention requirement that recordkeeping requirement, in order to recommended that, rather than require was described in the Bureau’s SBREFA substantiate the accuracy of any that debt collectors retain ‘‘evidence of Outline is neither necessary nor information about consumers it compliance,’’ the record retention warranted to accomplish the furnishes that is subject to a direct provision should require debt collectors requirement’s purpose, which is to dispute.’’ 594 Records reasonably to retain more types of documents. promote effective and efficient substantiating a debt collector’s claims Specifically, these commenters said, the enforcement and supervision of the that a consumer owes a debt are records provision should reflect the types of requirements of the FDCPA and that are evidence of the debt collector’s documents described in the record Regulation F, thereby promoting compliance or noncompliance with the retention provision of the Bureau’s compliance with the law which is FDCPA’s prohibition against unfair or SBREFA Outline, which would have beneficial to consumers. deceptive debt collection practices, as discussed in more detail below. 595 This is because further collection activity on Burden for Smaller Debt Collectors Accordingly, if a debt collector is also the account after deletion of some of the account’s records would necessarily mean that the debt Several industry commenters, as well a furnisher under Regulation V, a three- collector had failed to retain records, per as the U.S. SBA Office of Advocacy year Regulation F record retention § 1006.100(a), ‘‘starting on the date that the debt expressed concern about the potential requirement would be the minimum collector begins collection activity on a debt until burden of the proposed requirement on not less than three years after the debt collector’s amount of time for purposes of the last collection activity on the debt.’’ 596 FDCPA section 807 states that ‘‘[a] debt 597 Small Business Review Panel Outline, supra 593 To facilitate Bureau supervision of nonbank collector may not use any false, deceptive, or note 36, at 35. covered persons active in the consumer debt misleading representation or means in connection 598 Although the final rule uses certain authorities collection market, the Bureau published in 2012 a with the collection of any debt.’’ Section 808 states provided to the Bureau by the Dodd-Frank Act, the rule defining larger participants in that market. 77 that ‘‘[a] debt collector may not use unfair or rule relies primarily on the Bureau’s FDCPA FR 65775 (Oct. 31, 2012). unconscionable means to collect or attempt to authority and does not rely at all on the Bureau’s 594 12 CFR 1022, app. E, para. III(c). collect any debt.’’ Dodd-Frank Act UDAAP authority.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76858 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

small debt collectors. These commenters § 1006.100 prohibits a debt collector commenters expressed concern that, as noted that the cost of retaining from retaining records that are evidence a result, there could be significant electronic debt collection records, of compliance or noncompliance with burden associated with retaining many including telephone call recordings and the FDCPA and Regulation F for more call recordings for well beyond three scanned images, can be significant. than three years after the applicable years. Some of these commenters observed date. To alleviate this problem, some that most debt collectors have Comment 100(a)–1 clarifies that, if a industry commenters suggested that the incorporated record retention record is of a type that could evidence final rule take an approach to record procedures and costs into their daily compliance or noncompliance retention under which debt collectors operations, but that any additional depending on the conduct of the debt would be required to retain a record, requirements to retain records beyond collector that is revealed within the including a call recording, for three three years could impose significant record, then the record is one that is years from the unique or discrete expense. Others stated their belief that evidence of compliance or event—such as a telephone call or letter, a recorded telephone call would almost noncompliance and the debt collector report to a credit bureau, or a payment always constitute ‘‘evidence of must retain it. The comment also or credit—that generated the record. compliance’’ and that, to reduce burden, provides examples.600 As noted above, These commenters also noted that the the Bureau should consider imposing a comment 100(a)–2 clarifies that a debt suggested event-specific approach tiered recordkeeping requirement for collector need not create and maintain, would help reduce burden in the area of call recordings that takes into account for the sole purpose of evidencing healthcare debt collection, because the costs of maintaining recorded calls compliance, additional records that the healthcare debts are usually packaged for small debt collectors. debt collector would not have created in by patient rather than by account or As discussed above, the Bureau the ordinary course of its business in the debt. concludes that its revisions to absence of the record retention The Bureau agrees that the potential § 1006.100(a) (and its addition of requirement in § 1006.100(a). Comment unique burdens associated with § 1006.100(b) for a special rule regarding 100(a)–3 states, as was proposed, that retaining telephone call recordings (for telephone calls, as discussed below) § 1006.100(a) does not require retaining debt collectors who record telephone address the concerns of commenters, actual paper copies of documents and calls) merits a special rule regarding including small businesses, regarding that records may be retained by any their retention. The Bureau therefore is the burdens of a record retention method that reproduces them accurately finalizing § 1006.100(b) to set forth a requirement, including for small and ensures the debt collector can easily separate retention time period for businesses. In addition, the Bureau in access them (including the debt telephone call recordings. Section the final rule has added comment collector having a contractual or other 1006.100(b) states that, if a debt 100(a)–2 to make clear that a debt legal right to access records possessed collector records telephone calls made collector need not create and maintain, by another entity). And final comment in connection with the collection of a for the sole purpose of evidencing 100(a)–4 provides clarity regarding debt, the debt collector must retain the compliance, additional records that the when the last collection activity on an recording of each such telephone call debt collector would not have created in account occurs and, thus, when the for three years after the date of the the ordinary course of its business in the retention clock starts to run. call.601 Thus, in contrast to other record absence of the record retention 100(b) types, a debt collector could delete a requirement in § 1006.100(a). For these call recording after three years and yet reasons, the Bureau determines that As noted in the section-by-section collection activity on the relevant most debt collectors of all sizes will be analysis of § 1006.100(a), the Bureau account could continue after that able to comply with the final rule’s received a number of comments time.602 The Bureau concludes that this record retention requirement without regarding the unique concerns approach to call recordings addresses making significant changes to their associated with retaining telephone call industry commenters’ concerns existing record retention policies and recordings. Industry commenters stated regarding potentially having to retain procedures.599 Accordingly, the Bureau that the lifespan of debt collection some call recordings for much longer concludes that the final record retention accounts can vary significantly, with than three years, due to debt collectors’ requirement will not impose a some remaining open only for months batch file call recording systems. significant burden on debt collectors. and others remaining open for many The Bureau declines to adopt this For all of the reasons discussed above, years. These commenters further stated event-specific approach for retention of the Bureau is finalizing § 1006.100(a) to that many debt collectors’ systems store provide that, except as provided in telephone call recordings in large batch files based on date (e.g., a debt collector 601 Final comment 100(b)–1 clarifies that, while § 1006.100(b), a debt collector must nothing in § 1006.100 requires a debt collector to retain records that are evidence of creates and stores one batch file each make call recordings, if a debt collector records compliance or noncompliance with the day that contains all of the call telephone calls, the recordings are evidence of FDCPA and Regulation F starting on the recordings for that day) and that, under compliance or noncompliance with the FDCPA and the Bureau’s proposal, a debt collector Regulation F and the debt collector must retain the date that the debt collector begins recording of each such telephone call for three years collection activity on a debt until three would need to retain a given date’s call after the date of the call. years after the debt collector’s last recordings for at least three years 602 For example, if a call recording occurred at collection activity on the debt. beyond the lifespan of the longest- month six in the life of an account, the call lifespan account for which a call was recording could be deleted three years later; and, Comment 100–1 states that nothing in collection activity on that account could continue recorded on that date. These past the account’s three-and-a-half-year mark, 599 As in the proposal, the final recordkeeping notwithstanding that the call recording had been requirement does not require a debt collector to 600 Final comment 100(a)–1 includes an example deleted. Further, as noted above, comment 100–1 record telephone calls. However, as discussed that refers, in part, to disclosures required by the provides that nothing in § 1006.100 prohibits a debt below, if a debt collector’s practice is to record FDCPA, as implemented by Bureau regulation. The collector from retaining records that are evidence of telephone calls, then the such records are evidence Bureau expects that, in the Bureau’s disclosure- compliance or noncompliance with the FDCPA and of compliance or noncompliance and the debt focused final rule, this reference will be updated to Regulation F for more than three years after the collector must retain them. refer to disclosures required by § 1006.34. applicable date.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00126 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76859

record types other than call recordings, the Dodd-Frank Act; 604 and Dodd-Frank commenter was particularly concerned as suggested by some commenters. This Act section 1024(b)(7)(B), which that debt collectors might argue that is because the Bureau determines, based authorizes the Bureau to require a compliance with the proposal’s safe on comments received and its own person described in Dodd-Frank Act harbor provisions constitutes a defense experience, that the burden of retaining section 1024(a)(1) to retain records for to liability under State consumer call recordings can be significant, such the purpose of facilitating supervision of protection laws. To mitigate this that it is appropriate to give debt such a person and assessing and possibility, the commenter asked the collectors a date certain on which call detecting risks to consumers. Bureau to clarify that it does not intend recordings may be deleted—three years Title X of the Dodd-Frank Act does to exempt debt collectors from State law after the date of the telephone call— not provide a private right of action. requirements that afford equal or greater notwithstanding that collection activity Accordingly, the Bureau has determined protection to consumers. Further, the on the relevant account might continue that § 1006.100 does not provide a commenter asked the Bureau to clarify after that time. As discussed above, private right of action if a debt collector that an act or transaction that satisfies however, the Bureau concludes that it is were to fail to comply with the the proposal’s safe harbor provisions is generally inappropriate for a debt requirements of § 1006.100. not affirmatively authorized or collector to continue collection activity permitted with regard to any other law, on an account after the debt collector Section 1006.104 Relation to State such that the act or transaction would has begun to delete its records related to Laws be exempt from liability under State law that account. Further, the Bureau FDCPA section 816 provides that the pursuant to an exemption for federally believes based on feedback received that FDCPA does not annul, alter, or affect, permitted transactions. the burden of retaining other record or exempt any person subject to the Some commenters asked the Bureau types for the record retention period is provisions of the FDCPA from to clarify how proposed § 1006.104 and not as significant as that of retaining call complying with the laws of any State its related commentary would impact recordings. The Bureau therefore with respect to debt collection practices, State law disclosure requirements. believes that an event-specific approach except to the extent that those laws are According to these commenters, to record retention is neither necessary inconsistent with any provision of the proposed comment 104–1 did not track nor warranted for records other than call FDCPA, and then only to the extent of FDCPA section 816’s statutory language recordings.603 the inconsistency. FDCPA section 816 and therefore would be susceptible to For the reasons described above, the also provides that, for purposes of that competing interpretations. These Bureau is finalizing § 1006.100 to section, a State law is not inconsistent commenters expressed concern that facilitate supervision of, and to assess with the FDCPA if the protection such proposed comment 104–1 could be and detect risks to consumers posed by law affords any consumer is greater than interpreted to mean that proposed debt collectors, including debt the protection provided by the § 1006.104 would preempt State law collectors who are larger participants of FDCPA.605 The Bureau proposed disclosure requirements that afford the the consumer debt collection market, as § 1006.104 to implement FDCPA section same protections as the FDCPA and the defined in 12 CFR part 1090, and to 816.606 Proposed § 1006.104 mirrored corresponding provisions of Regulation enable the Bureau to conduct the statute, except that proposed F. These commenters opposed such an enforcement investigations to identify § 1006.104 referred to both the interpretation as being inconsistent with and help prevent and deter abusive, provisions of the FDCPA and the FDCPA section 816. unfair, and deceptive debt collection corresponding provisions of Regulation The Bureau notes that the final rule practices. F. Proposed comment 104–1 would implements the FDCPA, a Federal law. The Bureau is finalizing § 1006.100 have clarified that a disclosure required The final rule does not interpret State pursuant to its authority under title X of by applicable State law that describes law. Regarding the effect of the final the Dodd-Frank Act. Specifically, the additional protections under State law rule on State law, the Bureau will apply Bureau is finalizing § 1006.100 pursuant does not contradict the requirements of the standard Congress set forth in to Dodd-Frank Act section 1022(b)(1), the FDCPA or the corresponding FDCPA section 816. Under FDCPA which, among other things, provides provisions of Regulation F. section 816, debt collectors are only that the Bureau’s director may prescribe Several industry and consumer relieved of an obligation to comply with rules and issue orders and guidance as advocate commenters expressed overall State law if that law is inconsistent with may be necessary or appropriate to support for proposed § 1006.104 and its the FDCPA or the corresponding enable the Bureau to administer and related commentary and did not request provisions of Regulation F, and then carry out the purposes and objectives of changes. For instance, at least one only to the extent of that inconsistency the Federal consumer financial laws and commenter stated that the proposal (and, as noted above, a State law that to prevent evasions thereof. The Bureau appropriately recognized the ability of affords consumers greater protection also is finalizing § 1006.100 pursuant to States to enact laws that offer greater than the FDCPA and Regulation F Dodd-Frank Act section 1024(b)(7)(A), protections than those the FDCPA would not be inconsistent). For which authorizes the Bureau to provides. example, a State law that affords greater prescribe rules to facilitate supervision A State Attorney General commenter protection to consumers by imposing a of a person described in Dodd-Frank Act expressed concern about how the call frequency limit is not preempted by section 1024(a)(1) including a person proposal would interact with State § 1006.14(b), which sets a presumption identified as a larger participant of a unfair or deceptive acts or practices of compliance or violation as to call market for a consumer financial product laws that exempt from liability acts or frequency only with respect to the or service as defined by rule in transactions permitted or affirmatively FDCPA and Regulation F. Thus, this accordance with section 1024(a)(1)(B) of authorized by Federal law. The final rule does not affirmatively permit debt collectors to comply with the 603 The Bureau has considered comments 604 12 CFR 1090.105 defines larger participants of presumption regarding call frequency in received regarding the different structure of medical § 1006.14 instead of an applicable State- debt accounts and records relative to other debt the consumer debt collection market. types. The Bureau declines to adopt a record 605 15 U.S.C. 1692n. law frequency limit that affords greater retention provision specific to medical debt. 606 See 84 FR 23274, 23368 (May 21, 2019). protection to consumers. Further, the

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00127 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76860 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Bureau emphasizes that any safe harbor criteria, reorganized as § 1006.108 and industry commenter stated that the provided by Regulation F is a safe appendix A, and with minor changes for proposal (and existing Regulation F) harbor only for purposes of compliance clarity.609 deviated from the statutory language of with the FDCPA and Regulation F and Consistent with existing § 1006.2, FDCPA section 817 by allowing States is not a safe harbor with regard to State proposed § 1006.108(a) provided that to receive an exemption for State laws laws, unless States choose to any State may apply to the Bureau for that ‘‘provide greater protection for incorporate those Federal standards into a determination that, under the laws of consumers’’ than the FDCPA and their State legal frameworks. Moreover, that State, any class of debt collection Regulation F. According to this as discussed in their respective section- practices within that State is subject to commenter, this language could permit by-section analyses, the Bureau is not requirements that are substantially States to supplant the requirements of finalizing the safe harbors that were set similar to, or provide greater protection the FDCPA and Regulation F and expose forth in proposed §§ 1006.18(g) and for consumers than, those imposed debt collectors to a patchwork of 1006.42(e)(2), which were specifically under FDCPA sections 803 through 812 inconsistent State laws. This commenter cited by commenters as being and the corresponding provisions of urged the Bureau to revise proposed potentially problematic vis-a-vis State Regulation F, and that there is adequate § 1006.108 and proposed appendix A laws. As a result, the final rule contains provision for State enforcement of such consistent with FDCPA section 817 to fewer safe harbors that could interrelate requirements. Proposed § 1006.108(b) permit exemptions only for State laws with States’ laws prohibiting unfair, stated that the procedures and criteria whose requirements are substantially deceptive, or abusive acts and practices. whereby States may apply for such an similar to the FDCPA and the After considering the comments, and exemption are set forth in appendix A. corresponding provisions of Regulation pursuant to its authority under FDCPA Proposed appendix A set forth the F. section 814(d) to prescribe rules with procedures and criteria whereby States The Bureau declines to adopt the respect to the collection of debts by debt may apply to the Bureau for the recommendation to remove the phrase collectors, the Bureau is finalizing exemption described in proposed ‘‘substantially similar’’ from § 1006.108 § 1006.104 as proposed to implement § 1006.108. Proposed appendix A and appendix A. FDCPA section 817 FDCPA section 816. Because § 1006.104 largely mirrored existing §§ 1006.1 uses ‘‘substantially similar,’’ so largely restates the FDCPA, the through 1006.8, with certain revisions, removing that phrase from proposed provision appropriately accommodates including clarifying in proposed § 1006.108 and proposed appendix A State debt collection laws, including paragraph IV(a)(1)(i) that the would deviate from the FDCPA. Further, those laws that afford consumers greater ‘‘substantially similar’’ standard in the Bureau disagrees that the phrase is protections than the FDCPA and the FDCPA section 817 applies to the ambiguous. As discussed in the section- corresponding provisions of Regulation Bureau’s consideration of all aspects of by-section analysis of § 1006.38(d)(2)(ii), F. the State law for which the exemption the concept of ‘‘substantially the same,’’ The Bureau is not finalizing proposed is sought, including defined terms and which is analogous to ‘‘substantially comment 104–1 at this time. Because rules of construction.610 Accordingly, similar,’’ is sufficiently clear and is a proposed comment 104–1 specifically proposed paragraph IV(a)(1)(iv) used the concept that is present in other addressed how State law disclosure phrase ‘‘substantially similar’’ rather regulations. requirements might interact with the than ‘‘the same’’ as in existing However, the Bureau agrees with FDCPA and Regulation F, the Bureau Regulation F. commenters that proposed § 1006.108 expects to determine whether and how Some commenters expressed general and proposed appendix A should be to finalize proposed comment 104–1 as support for proposed § 1006.108 and modified to refer only to State laws with part of its disclosure-focused final rule. proposed appendix A. However, some substantially similar requirements as the commenters raised various concerns FDCPA and the corresponding Section 1006.108 Exemption for State about incorporating the existing provisions of Regulation F. The Bureau Regulation and Appendix A Procedures language of § 1006.2 and urged the recognizes the prerogative of States to for State Application for Exemption Bureau to change the proposed establish debt collection laws within From the Provisions of the Act language. For instance, an individual their jurisdictions. The Bureau notes FDCPA section 817 provides that the commenter argued that the term that FDCPA section 816, which is Bureau shall by regulation exempt from substantially similar is ambiguous and implemented by § 1006.104, the requirements of the FDCPA any should be removed from both accommodates State laws that afford class of debt collection practices within § 1006.108 and appendix A. Under this greater protections to consumers than any State if the Bureau determines that, approach, § 1006.108 would permit the FDCPA as long as they are not under the law of that State, that class of exemptions only for State laws that inconsistent with the Act. The Bureau is debt collection practices is subject to provide greater protection for also skeptical that the proposed requirements substantially similar to consumers than those imposed under language, which is consistent with those imposed by the FDCPA, and that FDCPA sections 803 through 812 and existing § 1006.2, would have resulted there is adequate provision for the corresponding provisions of in an irreconcilable patchwork of enforcement.607 Sections 1006.1 Regulation F. Conversely, at least one inconsistent State laws since only one through 1006.8 of existing Regulation F State has applied for and received an implement FDCPA section 817 and set 609 See 84 FR 23274, 23368 (May 21, 2019). exemption pursuant to FDCPA section forth procedures and criteria whereby 610 The Bureau also proposed several additional 817 since 1995.611 Nevertheless, FDCPA States may apply to the Bureau for changes to existing Regulation F. The Bureau section 817 refers only to exempting proposed to define the terms ‘‘applicant State law’’ exemption of debt collection practices and ‘‘relevant Federal law’’ in proposed paragraph State laws with requirements that are within the applying State from the I(b). Proposed appendix A would have stricken substantially similar to those imposed provisions of the Act.608 The Bureau existing § 1006.3(c) as redundant of proposed by the Act and does not mention proposed to retain these procedures and paragraph III(a) as revised. Proposed paragraph exempting State laws that afford greater III(d) of appendix A would have repeated existing § 1006.3(e) with certain clarifications. Proposed protections to consumers. Accordingly, 607 15 U.S.C. 1692o. paragraph VI(b) would have repeated existing 608 12 CFR part 1006. § 1006.6(b) with certain clarifications. 611 See 60 FR 66972 (Dec. 27, 1995).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76861

the Bureau is modifying § 1006.108(a) to recommendation. The Bureau cannot, in notes that, if such a scenario occurred, remove the reference to State advance, anticipate the questions raised it would work with the State to ensure requirements that ‘‘provide greater by a given State exemption application. that the State’s application received protection for consumers than’’ FDCPA While the Bureau intends to act appropriate consideration. These sections 803 through 812 and the expeditiously on applications, it is not commenters also asked whether a State corresponding provisions of Regulation feasible to commit to a mandatory that currently has an exemption under F. At the same time, the Bureau is not timeframe for responses, particularly as FDCPA section 817 and existing modifying paragraph IV(a)(2). Paragraph only one State has obtained an Regulation F will need to reapply or IV(a)(2) states that, when assessing exemption since the FDCPA was whether the Bureau would grandfather whether an applicant State law is passed.612 Notably, other Federal such an exemption. No modification to substantially similar to relevant Federal consumer financial laws that involve the proposed appendix text is necessary law, the Bureau will not consider Bureau determinations regarding State in response to this comment. Appendix adversely any additional requirements law do not impose response A sections VI and VIII, respectively, 613 of State law that are not inconsistent timeframes. In addition, the Bureau provide frameworks for evaluating and with the purpose of the Act or the notes that State government revoking existing exemptions. As noted requirements imposed under relevant commenters, which commenters stated above, to date, only one State has been Federal law. Thus, while the Bureau’s would benefit from a mandatory granted an exemption. Pursuant to the exemption standard is whether the State timeframe, did not request one. procedures established in sections VI law has ‘‘substantially similar’’ Pursuant to paragraph VI(a) of appendix and VIII, the Bureau intends to review requirements, exemptions may be A, a final rule granting an exemption available for State laws that are both under this provision becomes effective in due course whether that exemption substantially similar to the FDCPA and 90 days after the date of the publication remains appropriate in light of this final afford greater consumer protections. The of such rule in the Federal Register. rule and the upcoming disclosure- Bureau also is finalizing conforming This 90-day grace period provides focused final rule. changes to appendix A. sufficient time for debt collectors and A consumer advocate commenter Commenters also provided feedback consumers to adjust to an exemption, asked the Bureau to clarify in proposed specific to proposed appendix A. An which will bolster certainty in the paragraph VI(d) of appendix A that, if industry commenter objected to market. Thus, the Bureau concludes that an exemption is granted, the State law proposed paragraph IV(a)(1)(i)’s use of a mandatory timeframe is unnecessary. provisions that parallel the FDCPA and the phrase ‘‘substantially similar’’ rather A consumer advocate recommended the corresponding provisions of than ‘‘the same,’’ which appears in that the Bureau expressly require that, Regulation F constitute Federal law. The existing § 1006.4(a)(1)(i). According to when a State informs the Bureau about Bureau declines to adopt this the commenter, the Bureau’s proposal to a change in applicable State laws recommendation. As noted in the permit variation from FDCPA-defined pursuant to paragraph (VI)(b)(i) of proposal, the Bureau did not propose to 614 definitions and rules of construction appendix A, or the Bureau informs a change existing § 1006.2 language in would create uncertainty. The State about an amendment to the proposed appendix A because it did not commenter therefore suggested that the FDCPA or Regulation F pursuant to seek to make substantive changes to the Bureau finalize paragraph IV(a)(1)(i) paragraph (VI)(c) of appendix A, the requirements for State requests for using the language in existing State must provide a report outlining its exemptions.615 Because the commenter Regulation F. continued eligibility for the exemption did not explain what purpose this The Bureau declines to adopt this and that the Bureau conduct a review in recommendation. As discussed above, light of these changes. The Bureau clarification would serve, the Bureau FDCPA section 817 and final declines to adopt this recommendation. adopts paragraph VI(d) of appendix A as § 1006.108(a) expressly permit The purpose of paragraphs (VI)(b) and proposed. exemptions for State regulation when, (c) of appendix A is to help the Bureau For the reasons described above, the under the laws of that State, any class monitor whether an exemption granted Bureau is finalizing § 1006.108 and of debt collection practices within that pursuant to FDCPA section 817 and the appendix A largely as proposed, but State is subject to requirements that are corresponding provisions of Regulation with modifications to mirror the substantially similar to those imposed F continues to be appropriate. That the statutory language. Accordingly, under FDCPA sections 803 through 812 Bureau would review reports and pursuant to § 1006.108 and appendix A, and the corresponding provisions of this information provided pursuant to these a State may apply to the Bureau for a final rule. To best reflect FDCPA section paragraphs is implicit in the framework determination that, under the laws of 817’s statutory language and to ensure of § 1006.108 and appendix A. Thus, no that State, any class of debt collection consistency throughout Regulation F, additional clarification or modification practices within that State is subject to the Bureau uses the phrase is necessary. requirements that are substantially ‘‘substantially similar’’ in § 1006.108 Trade associations stated that the similar to those imposed under FDCPA and appendix A. Thus, the Bureau is proposal did not specify what steps a sections 803 through 812 and the finalizing paragraph IV(a)(1)(i) of State would need to take if, after corresponding provisions of Regulation appendix A as proposed. applying, a State withdraws and F. Trade associations asked the Bureau resubmits its exemption application. to mandate a timeframe for when the The Bureau declines to address this The Bureau is finalizing § 1006.108 Bureau would act on State exemption comment as part of the rulemaking but and appendix A to implement and applications. According to these interpret FDCPA section 817 and commenters, such a timeframe would 612 The FTC granted Maine the exemption in pursuant to its authority under FDCPA benefit States by reducing the likelihood 1995. See 60 FR 66972 (Dec. 27, 1995). section 814(d) to prescribe rules with that their requests would become 613 See, e.g., 12 CFR 1024.5(c)(3). respect to the collection of debts by debt 614 Paragraph (VI)(b)(i) of proposed appendix A collectors. outdated and would provide certainty to would have required a State to provide a report to consumers and debt collectors. The the Bureau within 30 days of any change in the Bureau declines to adopt this applicant State law. 615 See 84 FR 23274, 23369 (May 21, 2019).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76862 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Appendix C to Part 1006—Issuance of official commentary, guidance, and policy participants who have questions know Advisory Opinions statements issued prior to July 21, 2011, by how to request clarification and any a transferor agency with exclusive FDCPA section 813(e) provides that interested party can easily locate each rulemaking authority for the law in question advisory opinion addressing questions provisions in the FDCPA that impose (or similar documents that were jointly liability do not apply to any act done or agreed to by all relevant agencies in the case relating to Regulation F. omitted in good faith in conformity with of shared rulemaking authority) will be Supplement I to Part 1006—Official any advisory opinion of the Bureau, applied by the CFPB pending further CFPB Interpretations notwithstanding that, after such act or action. The CFPB will give due consideration The Bureau proposed to add omission has occurred, such opinion is to the application of other written guidance, Supplement I to Regulation F to publish amended, rescinded, or determined by interpretations, and policy statements issued prior to July 21, 2011, by a transferor agency official interpretations of the regulation judicial or other authority to be invalid in light of all relevant factors, including: (i.e., commentary).621 Proposed for any reason.616 Whether the agency had rulemaking comment I–1 explained that the The Bureau proposed to add appendix authority for the law in question; the commentary is the Bureau’s vehicle for C to Regulation F to publish a list of any formality of the document in question and supplementing Regulation F and has advisory opinions that the Bureau issues the weight afforded it by the issuing agency; been issued pursuant to the Bureau’s pursuant to FDCPA section 813(e).617 the persuasiveness of the document; and authority to prescribe rules under 15 Proposed appendix C also would have whether the document conflicts with U.S.C. 1692l(d) and in accordance with clarified that any act done or omitted in guidance or interpretations issued by another 618 the notice-and-comment procedures for good faith in conformity with any agency. informal rulemaking under the APA. advisory opinion issued by the Bureau, The Bureau is the first Federal agency Proposed comment I–2 set forth the including those referenced in appendix to possess authority to issue substantive procedure for requesting that an official C, provides the protection from liability rules for debt collection under the interpretation be added to Supplement for FDCPA-based violations afforded FDCPA. However, the Bureau considers I, and proposed comment I–3 described under FDCPA section 813(e). Proposed FTC advisory opinions issued before how the commentary is organized and appendix C also included instructions July 21, 2011, to be ‘‘other written numbered.622 for requesting an advisory opinion. guidance, interpretations, and policy The Bureau is finalizing The Bureau received several statements.’’ Thus, to the extent that this comment I–3 with certain technical comments regarding appendix C from rulemaking does not supersede any such corrections and, as discussed below, is industry trade groups and a group of interpretations, the Bureau will revising comments I–1 and –2 in consumer advocates. The comments continue to give due consideration in response to feedback. The Bureau is revising comment I–1 uniformly supported including light of all relevant factors. to clarify that the provisions of the appendix C, and a list of advisory The Bureau is finalizing appendix C commentary are issued under the same opinions, in the regulation. with revisions to update the process for authorities as the corresponding Industry commenters suggested submitting a request for an advisory provisions of Regulation F. In particular, adopting a timeline component that opinion. In June 2020, the Bureau this amendment has the effect of would require the Bureau to respond to launched a new pilot advisory opinion clarifying that some provisions of the requests for advisory opinions within a program and, at the same time, commentary are issued under sections certain period of time and publish draft proposed a procedural rule for a 1022 and 1032 of the Dodd-Frank Act, opinions for notice and comment before permanent advisory opinion instead of or in addition to authorities finalizing. The group of consumer program.619 The pilot advisory program under the FDCPA. The Bureau is also advocates suggested that the Bureau allows entities seeking to comply with revising comment I–1 for clarity to clarify that advisory opinions issued by any of the Bureau’s regulations, expressly reference the notice-and- the FTC prior to the Bureau’s creation including this final rule, to submit a comment procedures of section 553 of no longer have any validity. They also request if uncertainty exists.620 the APA,623 rather than referring to such suggested that the Bureau engage in Final appendix C reflects this new requirements as ‘‘the notice-and- notice and comment rulemaking to process. It states that a request for an comment procedures for informal amend the regulation or its commentary advisory opinion may be submitted in rulemaking.’’ instead of relying on advisory opinions, accordance with the instructions The Bureau is revising comment I–2 or, if the Bureau continues to issue regarding submission and content of to clarify that only revisions to the advisory opinions, to do so only in requests applicable to any relevant commentary, rather than all Bureau extremely limited circumstances that advisory opinion program that the interpretations of the regulation, will be includes publishing the draft opinion Bureau offers. The Bureau will review incorporated into the commentary. The for notice and comment with a requests for advisory opinions and will Bureau is making this revision to minimum review period of 60 days, as make advisory opinions public reserve the possibility that the Bureau well as publishing any denials of consistent with the process outlined in may interpret the regulation without requests for advisory opinions. such a program. necessarily adopting such With respect to the commenter’s The Bureau is finalizing appendix C interpretations into the commentary. request to clarify that FTC advisory pursuant to its authority under FDCPA The Bureau is also revising comment opinions no longer have any validity, sections 813(e) and 814(d). Final I–2 to clarify that revisions to the the Bureau declines to do so. As appendix C will facilitate compliance commentary made in accordance with explained in the Bureau’s 2011 with Regulation F by ensuring that Identification of Enforceable Rules and the rulemaking procedures of section 553 of the APA (5 U.S.C. 553) will be Orders, 618 Identification of Enforceable Rules and Orders, 76 FR 43569, 43570 (July 21, 2011). incorporated in the commentary after for laws with respect to which rulemaking 619 85 FR 37331 (June 22, 2020). authority will transfer to the CFPB, the 620 The proposed permanent advisory opinion 621 84 FR 23274, 23370 (May 21, 2019). program contemplates expanding the program to 622 Proposed commentary relating to specific 616 15 U.S.C. 1692k(e). allow other individuals and entities to request sections of the regulation is addressed in the 617 84 FR 23274, 23370 (May 21, 2019). guidance. section-by-section analyses of those sections, above.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76863

publication in the Federal Register. As presumptions are not effective until the who owe debts and an offsetting cost to proposed, the comment referenced final rule’s effective date. creditors and debt collectors. A decrease publication in the Federal Register, but in repayment will in turn lower the VII. Dodd-Frank Act Section 1022(b) not the other requirements of the APA. expected return to lending. This can Analysis lead lenders to increase interest rates VI. Effective Date A. Overview and other borrowing costs and to restrict availability of credit, particularly to The Bureau proposed that the final In developing the rule, the Bureau has higher-risk borrowers.626 Because of rule take effect one year after considered the potential benefits, costs, this, policies that increase protections publication in the Federal Register. The and impacts as required by section for consumers with debts in collection Bureau received several comments on 1022(b)(2)(A) of the Dodd-Frank Act.624 involve a tradeoff between the benefits this aspect of the proposal. A few Debt collectors play a critical role in of protections for those consumers and industry commenters supported the markets for consumer financial products the possibility of increased costs of proposed effective date, stating that a and services. Credit markets function credit and reduced availability of credit one-year implementation period would because lenders expect that borrowers for all consumers. Whether there is a net provide debt collectors with enough will pay them back. In consumer credit benefit from such protections depends time to comply with the rule. An markets, if borrowers fail to repay what on whether consumers value the industry commenter supported an 18- they owe per the terms of their loan protections enough to outweigh any month implementation period, stating agreement, creditors often engage debt associated increase in the cost of credit that the rule, as proposed, would collectors to attempt to recover amounts require updated policies and procedures or reduction in availability of credit. owed, whether through the court system The final rule will further the and significant employee training and or through less formal demands for programming changes that will take FDCPA’s goals of eliminating abusive repayment. debt collection practices and ensuring time to identify, program, and test. In general, third-party debt collection Another industry commenter requested that debt collectors who refrain from creates the potential for market failures. such practices are not competitively a 24-month implementation period. A Consumers do not choose their debt government commenter encouraged the disadvantaged.627 However, as collectors, and, as a result, debt discussed below, it is not clear based on Bureau to provide small entities with collectors do not have the same more than one year to comply, if such the information available to the Bureau incentives that creditors have to treat whether the net effect of the final rule entities were not exempted from the consumers fairly.625 Certain provisions rule altogether. Several industry will be to make it more costly or less of the FDCPA may help mitigate such costly for debt collectors to recover commenters asked the Bureau to clarify market failures in debt collection, for that a debt collector is permitted to unpaid amounts, and therefore not clear example by prohibiting unfair, whether the rule will tend to increase or comply with all or part of the final rule deceptive, or abusive debt collection before the effective date. decrease the supply of credit. The final practices by third-party debt collectors. rule will benefit both consumers and The Bureau has considered these Any restriction on debt collection comments and has determined that, as debt collectors by increasing clarity and may reduce repayment of debts, certainty about what the FDCPA proposed, the final rule will become providing a benefit to some consumers effective one year after publication in prohibits and requires. When a law is unclear, it is more likely that parties the Federal Register. The Bureau 624 Specifically, section 1022(b)(2)(A) of the determines that the revisions made to Dodd-Frank Act (12 U.S.C. 5512(b)(2)(A)) requires will disagree about what the law the proposal and discussed in detail in the Bureau to consider the potential benefits and requires, that legal disputes will arise, part V will permit debt collectors to costs of the regulation to consumers and covered and that litigation will be required to persons, including the potential reduction of access resolve disputes. Since 2010, consumers meet this effective date period. by consumers to consumer financial products or As discussed in part V, the Bureau services; the impact of the rule on insured have filed approximately 8,000 to intends to issue a disclosure-focused depository institutions and insured credit unions 12,000 lawsuits under the FDCPA each final rule to address all aspects of with $10 billion or less in total assets as described year, some of which involve issues on in section 1026 of the Dodd-Frank Act (12 U.S.C. which the law is unclear.628 The proposed §§ 1006.26 and 1006.34 and 5516); and the impact on consumers in rural areas. certain related topics, as noted in part 625 Consumers do choose their lenders, and, in 626 principle, consumer loan contracts could specify See Thomas A. Durkin et al., Consumer Credit V. The Bureau recognizes that all and the American Economy 521–25 (Oxford U. stakeholders may benefit if the effective which debt collector would be used or what debt collection practices would be in the event a loan Press 2014) (discussing theory and evidence on how dates for both rules are harmonized; is not repaid. Some economists have identified restrictions on creditor remedies affect the supply accordingly, the Bureau will assess the potential market failures that prevent loan contracts of credit). Empirical evidence on the impact of State from including such terms even when they could laws restricting debt collection is discussed in effective date of the disclosure-focused section G below. The provisions in this final rule final rule and, if necessary, will make both borrowers and lenders better off. For example, terms related to debt collection may not could also affect consumer demand for credit, to the consider adjusting the effective date for be salient to consumers at the time a loan is made. extent that consumers contemplate collection this final rule. Alternatively, if such terms are salient, a contract practices when making borrowing decisions. However, there is evidence suggesting that The Bureau notes that debt collectors that provides for more lenient collection practices may lead to adverse selection, attracting a consumer demand for credit is generally not may, but are not required to, comply disproportionate share of borrowers who know they responsive to differences in creditor remedies. See with the final rule’s requirements and are more likely to default. See Thomas A. Durkin James Barth et al., Benefits and Costs of Legal prohibitions before the effective date. et al., Consumer Credit and the American Economy Restrictions on Personal Loan Markets, Journal of Law & Economics, 29(2) (1986). Until that date, the FDCPA and other 521–25 (Oxford U. Press 2014) (discussing potential sources of market failure and potential problems See 15 U.S.C. 1692(e). applicable law continue to govern the with some of those arguments). See also Erik Durbin 627 See id. conduct of FDCPA debt collectors. & Charles Romeo, The Economics of Debt 628 See WebRecon LLC, WebRecon Stats for Dec Similarly, to the extent the final rule Collection: With attention to the issue of salience 2019 & Year in Review, https://webrecon.com/ establishes a safe harbor from liability of collections at the time credit is granted (Sept. 4, webrecon-stats-for-dec-2019-and-year-in-review- 2020), Journal of Credit Risk (discussing how rules how-did-your-favorite-statutes-fare/ (last visited for certain conduct or a presumption that limit debt collection affect consumer welfare Oct. 4, 2020). Greater clarity about legal that certain conduct complies with or when debt collection is not salient to consumers requirements could reduce unintentional violations violates the rule, those safe harbors and when they borrow). Continued

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76864 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

number of disputes settled without in communication media by engaging although they may benefit from reduced litigation has likely been much with such debt collectors as much as or litigation costs. greater.629 Perhaps more important than more than they currently do by In short, the provisions related to the costs of resolving legal disputes are telephone. If this occurs, consumers communications will likely reduce the the steps that debt collectors take to could benefit from a reduction in overall number of telephone calls per prevent legal disputes from arising in telephone calls that may annoy, abuse, consumer, while at the same time the first place. This includes direct costs or harass them, as well as from resolving potentially reducing the number of calls of legal compliance, such as auditing their outstanding debts in a more timely required to reach each consumer. and legal advice, as well as indirect fashion. At the same time, debt Although the Bureau believes it is likely costs from avoiding collection practices collectors could benefit from reduced that consumers will benefit directly that might be both effective and legal time spent making telephone calls and from a reduction in telephone calls that but that raise potential legal risks. In from increased revenue. There is some annoy, abuse, or harass them, the some cases, debt collectors seeking to reason to believe this may occur—as Bureau cannot predict the net effect of follow the law and avoid litigation have noted below, a substantial fraction of these provisions on debt collectors’ adopted practices that appear to be consumers prefer to communicate by costs and revenues or the net change in economically inefficient, with costs that email, and consumers may well be more indirect costs to consumers if debt exceed the benefits to consumers or likely to return a voicemail message collectors cannot reach them from, for even impose net costs on consumers.630 from an identified caller than to answer example, litigation. Several provisions of the final rule their telephones in response to a call In developing the final rule, the will likely change the way debt from an unknown caller. Bureau has consulted, or offered to collectors communicate with Alternatively, the provisions of the consult with, the appropriate prudential consumers, and these provisions are final rule might make debt collection regulators and other Federal agencies, likely to interact with each other in less effective. Debt collectors could including regarding consistency with ways that make their net impact comply with the telephone call any prudential, market, or systemic difficult for the Bureau to predict. Most frequency provisions, reducing objectives administered by such significant of these are the provisions outbound calling for some debt agencies. related to telephone call frequencies, collectors, but not increase contact with B. Provisions To Be Analyzed limited-content messages, and consumers by using other electronic disclosures, although other communication media. This might The analysis below considers the provisions might fall into this category occur if debt collectors still fear some potential benefits, costs, and impacts to as well. The communication provisions legal risk from using other media, or if consumers and covered persons of key collectively are likely to reduce the they find the new communication provisions of the final rule (provisions), number of telephone calls from debt media are not effective in reaching which include: collectors. Currently many, though by consumers. In this case, although the 1. Prohibited communications with no means all, debt collectors number of telephone calls would be consumers. communicate with consumers strictly reduced, it would come at the cost of 2. Telephone call frequencies3 3. Limited-content messages. through live telephone calls and mail, making it more difficult for debt 4. Prohibition on the sale or transfer with limited or no communication by collectors to reach some consumers, of certain debts. voicemail message, email, text message, reducing revenue and potentially 5. Electronic disclosures and or other electronic media such as imposing costs on both consumers and communications. website portals. debt collectors from increased litigation In addition to the provisions listed It is possible that the net effect of the to recover debts. above, the rule restates nearly all of the communication provisions will be to The effect of the final rule on debt FDCPA’s substantive provisions and make debt collection more effective. collectors would likely lie somewhere adds certain clarifying commentary. Debt collectors who currently in between these two extremes, and the communicate by live telephone calls in Bureau finds these effects will likely C. Data Limitations and Quantification excess of the rule’s presumption of vary by debt collector and type of debt. of Benefits, Costs, and Impacts compliance for telephone call Some firms will likely adopt or expand The discussion in this part VII relies frequencies could substitute for some of use of newer communication media due on publicly available information as the excessive telephone call volume by to the reduced legal risk and find less well as other information the Bureau leaving limited-content messages need for telephone calls, while other has obtained. To better understand (which are voicemail messages) and firms may not do so or may not consumer experiences with debt sending email or text messages. experience the same effect. Still other collection, the Bureau developed its Consumers could respond to this change firms may be largely unaffected by the 2015 Debt Collection Consumer Survey, communication-related provisions. As which provides the first comprehensive and could also reduce lawsuits because, when discussed below, some debt collectors and nationally representative data on parties can better predict the outcome of a lawsuit, currently place only one or two they may be more likely to settle claims out of consumers’ experiences and preferences court. telephone calls per week to any related to debt collection.631 The Bureau 629 Some debt collectors have reported that they consumer. Such debt collectors are receive approximately 10 demand letters from unlikely to change their calling 631 The Bureau’s survey was conducted between attorneys asserting a violation of the FDCPA for practices and may not find it cost- December 2014 and March 2015. Consumers with each lawsuit filed. See Small Business Review effective to develop the information- and without debts in collection were asked to Panel Outline, supra note 36, at 69 n.105. complete this survey in order to provide the Bureau 630 For example, as discussed further below, technology infrastructure necessary to with data necessary to understand the experience many debt collectors currently avoid leaving communicate by email or text message. and demographics of consumers who have been voicemail messages for consumers or Relatedly, the Bureau is aware of at least contacted by debt collectors. Consumers were communicating with consumers by email because one mid-sized collection firm that selected using the Bureau’s Consumer Credit Panel, sending voicemail messages or emails may create a de-identified 1-in-48 sample of Americans with legal risks, notwithstanding that consumers may primarily uses email for communication consumer reports at one of the nationwide CRAs. prefer such messages to receiving multiple currently, and such firms also will be See CFPB Debt Collection Consumer Survey, supra telephone calls in which no message is left. unlikely to alter their practices, note 16, at 7–10.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76865

also relies on its consumer complaint qualitative discussion of those benefits, prohibits and requires, which could data, its Consumer Credit Panel, the costs, and impacts. In the proposed rule, improve compliance with the FDCPA Credit Card Database,632 and other the Bureau requested additional data or while reducing unnecessary litigation sources to understand potential benefits studies that could help quantify the regarding the FDCPA’s requirements. and costs to consumers of the rule.633 benefits and costs of the rule to As discussed in part V and in this part To better understand potential effects of consumers and covered persons. The VII, the goals of the rule’s provisions the rule on industry, the Bureau has Bureau summarizes comments on this regarding telephone call frequency engaged in significant outreach to subject below, but few comments include reducing consumer annoyance, industry, including through the explicitly addressed quantifying the abuse, or harassment attributable to Operations Study.634 In July 2016, the costs and benefits of the rule or repeated or continuous debt collection Bureau consulted with small entities as provided additional data or studies. telephone calls, while minimizing part of the SBREFA process and Comments on the benefits and costs of inadvertent negative impacts on debt obtained important information on the the rule are also discussed in part V collectors’ ability to collect, by potential impacts of proposals that the above. establishing presumptions that, with certain exceptions, debt collectors who Bureau was considering at the time, D. Baseline for Analysis many of which are included in the final place telephone calls at or below rule.635 In evaluating the potential benefits, specified frequency levels comply with The sources described above, together costs, and impacts of the final rule, the the FDCPA, and debt collectors who with other sources of information and Bureau takes as a baseline the current place telephone calls exceeding the Bureau’s market knowledge, form legal framework governing debt specified frequency levels violate the the basis for the Bureau’s consideration collection. This includes the FDCPA. The provisions regarding of the likely impacts of the rule. The requirements of the FDCPA as currently limited-content messages are intended Bureau makes every attempt to provide interpreted by courts and law to reduce debt collectors’ need to rely reasonable estimates of the potential enforcement agencies, other Federal on repeated telephone calls to establish benefits and costs to consumers and laws, and the rules and statutory contact with consumers by clarifying covered persons of the rule. While the requirements promulgated by the States. how a debt collector may leave a Debt Collection Consumer Survey In the consideration of benefits and voicemail message while minimizing provides representative data on costs below, the Bureau discusses its the risk of third-party disclosure. consumer experiences with debt understanding of practices in the debt The rule is also intended to protect collection, the survey responses collection market under this baseline consumers from the risks associated generally do not permit the Bureau to and how those practices are likely to with electronic communications while also facilitating the use of such quantify, in dollar terms, how particular change under the final rule. Until the creation of the Bureau, no communications in debt collection, provisions will affect consumers. With Federal agency was given the authority including by: (1) Clarifying how the respect to industry impacts, much of the to write substantive regulations FDCPA’s communication restrictions Bureau’s existing data come from implementing the FDCPA, meaning that apply to technologies that have qualitative input from debt collectors many of the FDCPA’s requirements are developed since the statute was passed, and other entities that operate in the subject to interpretations in court such as mobile telephones, email, text debt collection market rather than decisions that are not always consistent messaging, and social media; (2) representative sampling that would or do not always definitely resolve an enabling consumers who do not wish to allow the Bureau to estimate total issue, such as a single district court engage in electronic communications to benefits and costs. opinion on an issue. Debt collectors’ opt out of such communications easily; General economic principles and the practices reflect their interpretations of and (3) clarifying how debt collectors Bureau’s expertise in consumer the FDCPA and their decisions about can engage in email or text message financial markets, together with the data how to balance effective collection communications in a way that limits the and findings that are available, provide practices against litigation risk. Many of risk of third-party disclosures. The rule insight into the potential benefits, costs, the impacts of the final rule relative to also sets a general standard for sending and impacts of the final rule. Where the baseline would arise from changes required disclosures that is intended to possible, the Bureau has made that debt collectors would make in provide consumers with the same quantitative estimates based on these response to additional clarity about the protection whether the debt collector principles and the data available. Some most appropriate interpretation of what sends the disclosure in writing or benefits and costs, however, are not conduct is permissible and not electronically. amenable to quantification, or are not permissible under the FDCPA’s quantifiable given the data available to F. Coverage of the Rule provisions. the Bureau. The Bureau provides a The Bureau received no comments The final rule will apply to debt regarding this choice of baseline for its collectors as defined in the FDCPA. This 632 The Credit Card Database is a compilation of definition encompasses a number of de-identified loan-level information from the credit section 1022(b) analysis. types of businesses, which can be card portfolios of large banks. See Bureau of E. Goals of the Rule Consumer Fin. Prot., Credit Card Agreement generally categorized as: Collection Database, https://www.consumerfinance.gov/credit- The final rule is intended to further agencies, which collect payments owed cards/agreements/ (last visited Oct. 15, 2020). the FDCPA’s goals of eliminating to their clients, often for a contingency 633 For more information about Bureau data sources, see Sources and Uses of Data at the Bureau abusive debt collection practices and fee; debt buyers, which collect debts of Consumer Financial Protection (Sept. 26, 2018), ensuring that debt collectors who refrain that they purchase and own and either https://www.consumerfinance.gov/data-research/ from such practices are not regularly collect or attempt to collect research-reports/sources-and-uses-data-bureau- competitively disadvantaged. To these debts owned by others or have as their consumer-financial-protection/. ends, an important goal of the rule is to principal purpose the collection of 634 See CFPB Debt Collection Operations Study, supra note 34. benefit both consumers and debt consumer debt; collection law firms that 635 See Small Business Review Panel Report, collectors by increasing clarity and either have as their principal purpose supra note 37. certainty about what the FDCPA the collection of consumer debt or

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00133 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76866 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

regularly collect or attempt to collect commenter representing low-income communications with consumers consumer debt owed to others; and loan and underserved individuals and through media that consumers have told servicers when they acquire servicing of families noted that stress resulting from them not to use. The provisions may loans already in default. debt collection efforts can have benefit consumers and debt collectors Although creditors that collect on detrimental effects on consumer health. by further clarifying the requirements of debts they own generally will not be The Bureau acknowledges that, to the FDCPA sections 805(a) and 806, but the affected directly by the rule, they may extent that the final rule reduces Bureau does not expect that the experience indirect effects. Creditors aggressive debt collection, consumers provisions will cause significant that hire or sell debts to FDCPA-covered may receive benefits such as those changes to debt collectors’ existing debt collectors may experience higher discussed by these commenters. The practices. costs if debt collectors’ costs increase Bureau does not discuss these benefits 2. Telephone Call Frequencies and if those costs are passed on to explicitly below, as these benefits are creditors. As described below, the not readily quantified, but the Section 1006.14(b)(1) prohibits a debt Bureau believes that many compliance qualitative discussion below should be collector from, in connection with the costs on FDCPA-covered debt collectors understood to include all consumer collection of a debt, placing telephone will be one-time costs to come into benefits. calls or engaging in telephone compliance rather than ongoing costs to conversations repeatedly or 1. Prohibited Communications With continuously with intent to annoy, stay in compliance. To the extent Consumers compliance costs are incurred only once abuse, or harass any person at the called to adjust existing debt collectors’ Section 1006.6(b) generally number. Section 1006.14(b)(2)(i) systems and do not increase costs for implements FDCPA section 805(a)’s provides for a rebuttable presumption of new entrants, they are unlikely to be prohibition on a debt collector compliance for a debt collector who passed on to creditors because they will communicating with a consumer at places a telephone call to a particular not affect either marginal costs or the unusual or inconvenient times and person in connection with the collection number of firms in the market. places, with a consumer represented by of a particular debt neither: (A) More an attorney, and at a consumer’s place than seven times within seven G. Potential Benefits and Costs to of employment. This section also consecutive days; nor (B) within a Consumers and Covered Persons expressly prohibits attempts to make period of seven consecutive days after The Bureau discusses the benefits and such communications, which debt having had a telephone conversation costs of the rule to consumers and collectors already must avoid given that with the person in connection with the covered persons (generally FDCPA- a successful attempt would be an collection of such debt, subject to the covered debt collectors) in detail FDCPA violation. Section 1006.14(h)(1) exclusions in § 1006.14(b)(3). Section below.636 The Bureau believes that an interprets FDCPA section 806’s 1006.14(b)(2)(ii) sets forth a rebuttable important benefit of many of the prohibition on a debt collector engaging presumption of a violation for a debt provisions to both consumers and in any conduct the natural consequence collector who places a telephone call to covered persons—compared to the of which is to harass, oppress, or abuse a particular person in connection with baseline of the FDCPA as currently any person in connection with the the collection of a particular debt: (A) interpreted by courts and law collection of a debt to prohibit debt More than seven times within seven enforcement agencies—is an increase in collectors from communicating or consecutive days; or (B) within a period clarity and precision of the law attempting to communicate with a of seven consecutive days after having governing debt collection. Greater person through a medium of had a telephone conversation with the certainty about legal requirements can communication if the person has person in connection with the collection benefit both consumers and debt requested that the debt collector not use of such debt. collectors, making it easier for that medium to communicate with the By establishing in the final rule a consumers to understand and assert person. rebuttable presumption of compliance their rights and easier for firms to Debt collectors are already prohibited or of a violation, the Bureau provides ensure they are in compliance. The from communicating with consumers at additional flexibility relative to the Bureau discusses these benefits in more a time or place that is known or should proposal to debt collectors in cases be known to be inconvenient to the where there may be a good reason to detail with respect to certain provisions consumer. The Bureau therefore expects call, or to have a live communication below but believes that they generally that debt collectors already keep track of with, a person, more frequently than the apply, in varying degrees, to all of the what consumers tell them about the bright-line limits in the proposed rule. provisions discussed below. Some commenters urged the Bureau times and places that they find Debt collectors will also need to to consider other particular costs and inconvenient and avoid communicating determine whether, under the benefits to consumers of restrictions on or attempting to communicate with circumstances, their calling might debt collection beyond those discussed consumers at those times or places. violate the FDCPA and the rule despite Similarly, the provisions regarding a telephone call frequency within the explicitly below. One commenter communication with attorneys and at presumption of compliance. The Bureau encouraged the Bureau to consider the the consumer’s place of employment anticipates that debt collectors will effect of aggressive debt collection track requirements that debt collectors generally choose to call no more often practices on marital stability and on are already required to comply with than the specified telephone call consumer privacy. A law firm under the FDCPA. The Bureau frequencies in order to reduce legal 636 For purposes of the section 1022(b)(2) understands that many debt collectors risks. Therefore, the discussion below analysis, the Bureau considers any consequences currently employ systems and business generally assumes that the practical that consumers perceive as harmful to be a cost to processes designed to limit effect of the final rule will be to cause consumers. In considering whether consumers communication attempts to consumers debt collectors to reduce telephone might perceive certain activities as harmful, the Bureau is not analyzing whether those activities at inconvenient times and places and calling frequency, in most cases, to at would be unlawful under the FDCPA or the Dodd- that many debt collectors also use these most the placement of seven telephone Frank Act. systems and processes to prevent calls in a seven-day period and one live

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76867

telephone conversation in a seven-day as those that address limited-content Data from the Bureau’s Debt period. Thus, many of the benefits and messages and electronic Collection Consumer Survey indicate costs of the provision are similar to communications, provide industry with that debt collectors often may attempt to those under the bright-line rule that was additional tools for reaching consumers. contact consumers more frequently than included in the proposal. At the same Potential Benefits to Consumers seven times per week. In the survey, 35 time, the final rule provides additional percent of consumers who had been flexibility to debt collectors but reduces Telephone calls debt collectors make contacted by a debt collector said the with intent to annoy, abuse, or harass the legal certainty compared to the debt collector had contacted or consumers are likely to cause proposed bright-line telephone call attempted to contact them four or more frequency limits, which will affect the consumers harm, and the Bureau has times per week, including 14 percent benefits and costs of the call frequency evidence, discussed below and in part V who said the debt collector had provisions as discussed further below. above, that many consumers perceive As discussed above in part V, harm from debt collectors’ repeated contacted or attempted to contact them 639 commenters who addressed the telephone calls.637 The Bureau expects eight or more times per week. telephone call frequency limits in the the provision to limit this harm by Another 29 percent said that the debt proposal strongly opposed the seven- reducing the frequency of telephone collector had attempted to contact them telephone call weekly frequency limit. calls and telephone conversations.638 one to three times per week.640 The Consumer advocates, some State FDCPA section 806 already generally survey question did not ask respondents Attorneys General, and multiple other prohibits conduct the natural to distinguish between actual contacts commenters argued that the limit was consequence of which is to harass, and contact attempts, and consumers too high, while industry commenters oppress, or abuse any person. FDCPA are likely not aware of all unsuccessful and other commenters believed that the section 806(5) also specifically prohibits contact attempts.641 Still, the survey limit was too low. Several commenters repeated or continuous calling and responses suggest that it is not argued that a bright-line cap telephone conversations with ‘‘intent to uncommon for debt collectors to place conceptually was a good idea for clarity, annoy, abuse, or harass any person at telephone calls to consumers more than but that a cap of seven telephone calls the called number.’’ These prohibitions seven times per week, and the responses was variously too low, too high, not have been interpreted differently by would be consistent with many debt supported by rigorous evidence, or not different courts, and, while some debt collectors having live telephone supportable under the FDCPA. Some collectors call consumers less frequently conversations with consumers more industry commenters argued that bright than seven times in a given seven-day frequently than one time per week, lines are not helpful and that the period, many debt collectors place which would be presumed to be a proposed limits were too low in part telephone calls to consumers or engage 642 because of the need to try multiple violation under the final rule. Based consumers in telephone conversations on this, it is reasonable to estimate that telephone numbers. Supporters of a more frequently than this. at least 6.9 million consumers 643 are lower limit often also argued that the To quantify consumer benefits from limits on calling should be per-person. the provision, the Bureau would need One commenter argued that the information regarding both how much 639 CFPB Debt Collection Consumer Survey, supra proposed limit was a reasonable note 16 at 44 n.5. the provision would reduce the number 640 compromise between preventing Id. of calls debt collectors place to 641 The survey also did not ask respondents to consumer harm and minimizing consumers and the benefit (or harm) distinguish between calls about a single debt and industry burden. Commenters were each consumer would receive as a result calls about multiple debts. generally more supportive of the of this reduction. Although the Bureau’s 642 The survey questions did not distinguish proposed limit of one live conversation data do not permit it to reliably quantify among different types of contact, and survey per seven-day period, although some responses may have included contacts such as either the reduction in call frequency or letters or email that would not be subject to the industry commenters argued that this how much consumers would value this provision. The survey suggests that contact attempts limit should be higher, or that the reduction in dollar terms, the discussion from debt collectors other than by telephone or proposed exceptions to the limit were below summarizes the data available to letter are relatively uncommon. CFPB Debt unclear or should be expanded to Collection Consumer Survey, supra note 16. at 42, the Bureau on these two points. table 22. The Bureau understands that debt include circumstances specified by the collectors seldom send letters more than once per commenters, such as where there was 637 The FDCPA’s standard of liability for repeated week, so a large majority of contact attempts likely active litigation or as required by calling is not perceived harm by consumers, but were by telephone. Information from industry also applicable law. rather depends on the debt collector’s intent or the confirms that debt collectors sometimes place Many commenters said that the ‘‘natural consequence’’ of the conduct. See FDCPA telephone calls to consumers more than seven times section 806(5) and 806, 15 U.S.C. 1692d(5) and per week. See discussion under ‘‘Costs to covered Bureau did not have evidence to 1692d. Nonetheless, section 1022(b)(2)(A) of the persons’’ below. support the specific proposed call limit Dodd-Frank Act requires the Bureau to consider the 643 This is calculated as 14 percent of an of seven call attempts in a seven-day potential benefits and costs of its regulation to estimated 49 million consumers contacted by debt period. The Bureau requested data from consumers and covered persons, which may collectors each year. The Bureau estimates that industry that could provide further include potential benefits or costs that were not about 32 percent of consumers with a credit file, or contemplated or intended by the FDCPA. about 67 million, are contacted each year by a evidence on the effects of particular 638 By leading some debt collectors to further creditor or debt collector attempting to collect a frequency limits but did not receive data limit telephone calls, the rule could have the debt. Of those, 23 percent were most recently that would permit it to quantify the ancillary effect of preventing some calls that are not contacted by a creditor, 63 percent by a debt costs and benefits of different frequency intended to annoy, abuse, or harass consumers and collector, and 15 percent did not know whether the could in fact prevent some calls that consumers contact was from a creditor or debt collector. Based limits. The Bureau believes that would find beneficial, as discussed below under on this, the Bureau estimates that 73 percent of providing for a rebuttable presumption ‘‘Potential costs to consumers.’’ This ancillary effect consumers were contacted by a debt collector, of compliance or of a violation, rather may be ameliorated by the provision being assuming that the share of consumers contacted by than a bright-line limit, will reduce the structured as a rebuttable presumption of violation. a debt collector is the same in this group as it is Telephone calls that consumers would find among consumers who did know whether the most cost to consumers or to industry of beneficial are more likely to have facts that would recent contact was from a debt collector. See CFPB selecting a limit that is too high or too overcome the presumption of a violation. See Debt Collection Consumer Survey, supra note 16 at low. In addition, other provisions, such comment 14(b)(2)(ii)–2. 13, 40–41.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00135 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76868 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

called by debt collectors more than the proposed frequency limits were per was large enough for the Bureau to make seven times in a week during a year. debt rather than per person, consumers reasonable statistical inferences based The Bureau’s Debt Collection with multiple debts in collection could upon it, including for subsamples of Consumer Survey supports an inference be called significantly more than seven that group, such as consumers who that many consumers would benefit if times in each seven-day period and may reported being contacted one to three they received fewer calls from debt be harmed as a result. The Bureau times per week. collectors, although it does not provide acknowledges that many consumers With respect to statistical evidence with which to estimate the have multiple debts, and in some cases significance, the commenter is incorrect dollar value of those benefits. Most multiple debts may be collected by the in stating that the results of the survey respondents who had been contacted by same debt collector, although the were statistically insignificant. The a debt collector at least once per week Bureau does not have data to show how Bureau did not explicitly report said they had been contacted too often. frequently consumers are called when measures of statistical precision in the As shown in Table 1, 95 percent of they have multiple debts being collected survey report, as the report was respondents who said debt collectors by the same debt collector. intended for a general audience. had contacted or attempted to contact An industry trade group commenter However, the Bureau calculated them four or more times per week and criticized the Debt Collection Consumer measures of statistical significance for 76 percent of those reporting contact or Survey and argued that the Bureau all of its estimates and took care in the attempted contact one to three times per should not rely on the survey’s results. report to discuss only comparisons that week said that they had been contacted Specifically, the commenter asserted were statistically significant at a 95 too often by the debt collector, whereas that the survey’s sample size was too percent confidence level or higher.646 22 percent of those contacted less than small to be reliable and that the Moreover, in general, the 95 percent once a week said they had been estimates of the survey were not confidence interval for the statistics contacted too often. statistically significant. The commenter cited above is on the order of between also objected to some of the subsample three and 10 percentage points, with TABLE 1—CONSUMERS INDICATING comparisons made by the Bureau in the smaller subsamples having a wider 647 THEY HAD BEEN CONTACTED TOO study or in the proposed rule. The margin. For the statistics relied on by OFTEN, BY CONTACT FREQUENCY commenter also argued that the fact that the Bureau and discussed above, a [Percent] the survey did not distinguish between difference of plus or minus three to 10 attempted contacts and actual live percentage points would not Consumers contacts made the data unreliable. meaningfully change the Bureau’s who said Finally, the commenter argued that conclusions. For instance, the survey Contact frequency they were consumer surveys are inherently found that, among consumers who contacted reported being contacted between one too often unreliable. With respect to the size of the survey and three times per week by debt Less than once per week ...... 22 sample, the Bureau notes that, for binary collectors, 76 percent said they were One to three times per week .... 76 or categorical outcomes such as those in contacted too often. If the true Four or more times per week ... 95 the survey, a sample size of a few percentage in the population were 66 hundred to a thousand is generally percent, or 86 percent, the basic A State Attorney General commenter sufficient to obtain results that are conclusion would be the same. Finally, and another commenter interpreted the within a few percentage points of what with respect to the commenter’s statistic that many consumers contacted one would find in the general assertion that the limitations of the at least once per week reported being population, so long as the sampling survey make it inherently unreliable, contacted too often as evidence that the procedure is random and designed to the Bureau disagrees. Although the Bureau’s proposed telephone call ensure a representative sample.644 The phrasing of the question about contact frequency limits were too high and survey included around 1,000 frequency does not specifically track the allowed too much calling. The Bureau structure of the rule’s telephone call notes again that the survey did not consumers who had experience with debt collection,645 meaning the sample frequency provisions, the Bureau distinguish between contact attempts nonetheless believes the survey and live conversations. And, given that 644 Indeed, the Bureau’s use of its Consumer provides useful information about many debt collectors do not currently Credit Panel as a sampling frame for the survey consumers’ experience with debt leave voicemails, many survey allowed the Bureau to make the sample more collection and about the benefits respondents may not have been aware of representative of the U.S. population than is usually consumers may receive from the final (and therefore the survey results may possible in a survey. See CFPB Debt Collection not reflect consumers’ views about) Consumer Survey, supra note 16, for more details. 645 As noted in the survey report, the Bureau correctly, even a sample of 600 individuals can be contact attempts that did not result in a oversampled consumers that it expected to be more used to make inferences about the whole conversation. The survey also did not likely to have experience with debt collection. population, albeit with a larger confidence interval explicitly ask whether the consumers Oversampling is a standard procedure in survey or margin of error. 646 who say they were contacted too often methodology that is used when the researcher is The Bureau followed the same approach in its interested in analyzing a particular sub-population recent report on its disclosure testing, where it felt harassed. That said, the Bureau but also wants to analyze the population as a whole. disclosed the approach more explicitly. See CFPB agrees that some consumers may Groups that are oversampled are assigned a lower Quantitative Testing Report, supra note 33. consider some telephone call weight when analyzing the whole sample but can 647 While these statistics were not explicitly frequencies that would have been be treated as individuals with equal weight when reported in the survey report, the Bureau notes that analyzing the subsample. Thus, although based the margin of error on a survey of this nature is permitted under the proposal to be too upon the survey weights the Bureau estimated that largely a function of the sample size of the survey, frequent, but notes that, as discussed 32 percent of all consumers had experience with and that margins of error on surveys with sample elsewhere in this part, restrictions on debt collection, the survey data included over 1,000 sizes in the range of 600–1,000 will be familiar to call frequency can also have negative consumers who reported having experience with many lay readers. For instance, political polls with debt collection in the past year. The commenter sample sizes of 600–1,000 respondents are often consequences for consumers. mistakenly quotes the size of the subsample as 632 reported in the news and have margins of error that Multiple consumer advocate and individuals. While incorrect, this is largely beside are generally in the range of 3 to 5 percentage other commenters noted that, because the point—as long as the sampling was done points.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00136 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76869

rule’s presumptions regarding telephone a reduction in telephone call frequency, debt collectors may not honor call frequencies. there is indirect evidence of costs consumers’ requests to cease The Bureau’s consumer complaint consumers are willing to bear to avoid communications unless they are made data also indicate that consumers find unwanted calls. One leading service that in writing. In the Debt Collection frequent or repeated calls harmful. offers to block inbound ‘‘robocalls’’ to a Consumer Survey, 42 percent of Communication tactics ranked third in consumer’s mobile telephone charges respondents who had been contacted debt collection complaints submitted to $1.99 per month for the service.650 Such about a debt in collection reported the Bureau during 2018 and fourth in services are an imperfect analogy to the having requested that a creditor or debt 2019, and the majority of complaints in rule’s telephone call frequencies for at collector stop contacting them.652 These this category—55 percent in both years, least two different reasons: First, they respondents generally did not make the or about 6,000 complaints across both are intended to completely block calls request in writing.653 Of these years—were about frequent or repeated rather than limit their frequency; and consumers, approximately 75 percent telephone calls.648 second, such services block reported that the creditor or debt Several industry and other telemarketing calls in addition to debt collector did not stop attempting to commenters disputed the reliability and collection calls, while not blocking all contact them.654 representativeness of the Bureau’s debt collection calls. Given these As discussed above, technological complaint data. Some of these differences, the price of this service solutions are also increasingly available commenters pointed to reports of does not provide a precise analog for the to consumers who want to avoid certain inaccuracies in the complaint data value to consumers of the telephone call telephone calls and may be used to themselves, while others argued that frequencies. Nonetheless, the example screen out calls from some debt complaints only represent a tiny does provide evidence that many collectors. However, such solutions may fraction of all consumers contacted by consumers are willing to pay prices in be under-inclusive (in that they do not debt collectors. The Bureau the range of $24 per year to avoid screen out telephone calls from all debt acknowledges that, as in most unwanted telephone calls.651 collectors) or over-inclusive (in that a industries, a relatively small percentage Some of the benefits from the final consumer may want to maintain some of consumers in collection file formal rule’s telephone call frequency telephone contact with a debt collector complaints. The Bureau also notes that provisions could be obtained if rather than eliminating all calls from not all consumers who have problems consumers used protections they that debt collector). with a debt collector file complaints already have under the FDCPA to help with the Bureau—many may not them avoid too-frequent debt collection Potential Costs to Consumers formally complain at all, and others may calls. Debt collectors must cease most Consumers may benefit from file complaints with another source, communications in response to a communicating with debt collectors such as the Federal Trade Commission written request from the consumer to do about their debts. For consumers being or their State Attorney General’s office. so. Furthermore, because section contacted about a debt they in fact owe, Nonetheless, the Bureau believes that 805(a)(1) of the FDCPA prohibits debt communicating with the debt collector the rate of consumer complaints collectors from communicating about a may help consumers resolve the debt, provides a useful benchmark as to the debt at any time or place that the debt which could help avoid further fees and importance of the problem of frequent collector knows or should know is interest, adverse credit reporting, or or repeated calls. That is, among the inconvenient to the consumer, debt lawsuits. A few commenters made these consumers who complain to the Bureau collectors risk violating section 805(a)(1) points, saying that the proposed bright- about debt collection communication if they do not take heed when line limits on telephone call frequency tactics (one of the most complained- consumers say they do not want to would affect access to and the cost of about categories), more than half communicate at certain times or places. credit and would lead to more negative complain about repeated calls, However, many consumers may not credit reporting and litigation. For indicating that frequent or repeated want to completely cease consumers being contacted about a debt telephone calls represent a large share of communication about a debt because, they do not owe, communications from debt collection problems.649 for example, debt collectors who cannot debt collectors may alert consumers to Although the Bureau does not have recover through such communications errors in their credit reports or that they evidence that could be used to estimate may initiate litigation to recover on the are victims of identity theft. During the the monetary value consumers attach to debt. Additionally, consumers who tell meeting of the Small Business Review debt collectors to cease communication 648 See Bureau of Consumer Fin. Prot., Consumer Panel, some debt collectors said that the Complaint Database, https:// orally may not benefit because some frequency limits that were then under www.consumerfinance.gov/data-research/ consideration could extend the period consumer-complaints/search/ 650 Nomorobo, http://www.nomorobo.com (last needed to establish contact with a _ _ ?dataNormalization=None&date received visited Oct. 22, 2020). consumer, as further discussed below max=2019-12-30&date_received_min=2018-01- 651 Another source of indirect evidence of the 01&issue=Communication value to consumers of reduced telephone call under ‘‘Potential costs to covered %20tactics%E2%80%A2Frequent%20or frequency is the Bureau’s consumer complaints. persons.’’ If the telephone call %20repeated%20calls&product=Debt Based on the Bureau’s records, the average time for frequencies in the final rule mean that %20collection&searchField=all&tab=Map (last a consumer to file a complaint with the Bureau by debt collectors are less able to reach visited Oct. 23, 2020). Consumers can identify only telephone or through the web portal is one issue to categorize their complaints, so these approximately 15 minutes, although this varies over some consumers, or that communication numbers do not include cases in which a consumer time and across complaint categories. Valuing with some consumers is delayed, those chose a different issue (such as ‘‘I don’t owe the consumers’ time using the average U.S. private consumers may be harmed by missing debt’’) but also complained about call frequency. sector wage of approximately $27 per hour suggests Note that consumers who complain about frequent that some consumers are willing to give up or repeated telephone calls may not be receiving a approximately $6.75 worth of their time in hopes 652 CFPB Debt Collection Consumer Survey, supra frequency of calls that would violate the Rule. of reducing call frequency from one debt collector. note 16, at 35, table 17. 649 Note that not all of the consumers making See Bureau of Labor Statistics, U.S. Dep’t of Labor, 653 Of consumers who asked not to be contacted, these complaints would be helped by the rule, as Economic News Release: Employment Situation, 87 percent said they made the request by telephone they may have received a frequency of telephone table B–3 (Feb. 1, 2019), https://www.bls.gov/ or in person only. Id. at 34–35. calls that would not violate the rule. news.release/empsit.t19.htm. 654 Id.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76870 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

an opportunity to resolve a debt or to on one debt collector’s calling data that reducing those legal risks, potentially resolve a debt sooner. the proposed bright-line telephone call increasing collection revenue. To quantify any such harm, the frequency limits would increase the Some debt collectors might also Bureau would need data to estimate time to first contact by an average of benefit from a reduction in calls made how the telephone call frequencies in about one week. Even taking the by other debt collectors. The Bureau the final rule will affect whether and commenter’s analysis as given, if the understands that many consumers have when debt collectors communicate with average delay is approximately a week, multiple debts being collected by consumers as well as the harm this would have very different different debt collectors.655 In seeking consumers experience if they do not implications for litigation overall payments from consumers, multiple communicate with debt collectors. In its compared to an average delay of debt collectors compete with each other discussion below of costs to covered approximately six months. In addition, to obtain consumers’ attention and seek persons, the Bureau discusses the both the Bureau’s calling data and the payment, which can lead to a large available evidence about how the commenter’s litigation likelihood data aggregate number of debt collection telephone call frequencies in the final are each from a single firm and thus calls, potentially overwhelming some rule will affect whether debt collectors unlikely to be representative of the consumers and making them less likely communicate with consumers. As market as a whole. The Bureau expects to answer calls or otherwise engage with discussed there, the data are limited, but the delay in making contact, and any debt collectors.656 This in turn could evidence the Bureau does have suggests resulting increase in litigation, to vary make it harder for each debt collector to that, if debt collectors limit their calling by the age of debt, the type of debt, and recover outstanding debt.657 Thus, one to the frequency levels specified in final firm-specific practices. potential benefit to debt collectors of the § 1006.14(b)(2), it might somewhat To the extent that some debt provision’s telephone call frequencies is reduce the number of consumers collectors currently call less than the a lower frequency of telephone calls by reached by telephone within a few final rule’s telephone call frequencies to other debt collectors, which could make months after a debt collector starts avoid legal risks, such debt collectors consumers more likely to engage and attempting contact, but that the could perceive a reduction in legal risk repay. reduction is likely to be limited to a In addition, some debt collectors that leads them to increase their calling relatively small fraction of debts. specialize in approaches to collection frequency as a result of the final rule. The Bureau does not have that do not rely on frequent call This would result in costs to some representative data that can be used to attempts, and these debt collectors may consumers if they find the increase in quantify the harm consumers benefit from the telephone call call frequency harmful. Some consumer experience when they do not frequency provision. In particular, debt advocate commenters echoed this point communicate with debt collectors, or collectors who focus on litigation and but did not provide any data to help when those communications are those who communicate with quantify potential increases in delayed. If consumers do not consumers primarily by media not telephone call frequency or the effects of communicate with debt collectors about covered by the provision, such as letters such increases on consumers. Because debts, they could suffer additional harm and email, may be more effective in consumers can rebut the presumption from debt collection in some cases, communicating with consumers relative that telephone call frequencies below particularly if the debt collector or to debt collectors who focus on those in final § 1006.14(b)(2) comply creditor initiates a lawsuit. A suit could communicating by telephone. This, in with FDCPA section 806(5), any lead to increased fees, legal costs, and turn, may increase their market share at increase in harassment as a result of the the possibility of a judgment that could the expense of debt collectors who are provision may also be limited, lead to garnishment of wages or other more dependent on frequent calls. legal steps to recover the debt. compared to the bright-line limit in the One large debt buyer’s comment proposal that the commenters expressed Potential Costs to Covered Persons included an analysis of its own data, concern about. This provision imposes at least two which found that delaying contacting a Potential Benefits to Covered Persons categories of costs on debt collectors. consumer by two, four, or 12 months First, it means that debt collectors must increased the probability of litigation by As with several other provisions of track the frequency of outbound 15, 19, and 35 percent, respectively. the rule, the rebuttable presumptions of telephone calls, which will require This commenter did not state how much compliance and violation with many debt collectors to bear one-time the proposed bright-line limits on § 1006.14(b)(1) and FDCPA section costs to update their systems and train telephone call frequencies would delay 806(5) based on the frequencies with staff, and which will create ongoing consumer contact but did state that which debt collectors placed telephone costs for some debt collectors. Second, raising the proposed seven telephone calls may reduce legal uncertainty about for some debt collectors, the provision call weekly frequency limit to 15 calls the interpretation of existing FDCPA may lead to a reduction in the frequency per week would reduce its number of language. Frequent telephone calls are a with which they place telephone calls to referrals to litigation by 2,459 consistent source of consumer-initiated consumers, which could make it harder consumers per year. These data confirm litigation and consumer complaints to the general principle above, that some Federal and State law enforcement 655 The Bureau’s survey indicates that 72 percent consumers may face litigation costs as a agencies. By establishing a standard for of consumers with a debt in collection were consequence of the telephone call call frequency, this provision makes it contacted about two or more debts in collection, and 16 percent were contacted about five or more frequency levels, but they do not easier for debt collectors to know what debts. Id. at 13, table 1. provide enough information for the calling patterns are permitted and 656 For example, borrowers could simply ignore Bureau to assess the size of the effect. reduce the costs of litigation and threats telephone calls or could adopt call screening or To assess this, the Bureau would need of litigation. To the extent that some blocking technology. to know how much the rule would be debt collectors currently call less than 657 In other words, debt collectors may face a ‘‘prisoner’s dilemma,’’ in which each debt collector expected to delay consumer contact. For the telephone call frequencies to avoid has incentives to call more frequently even though instance, as discussed below, the legal risks, they may call more debt collectors might collectively benefit from a Bureau estimated in the proposal based frequently if they see the provision as mutual reduction in call frequency.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00138 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76871

to reach consumers and delay or reduce communicate with consumers in most then reducing call frequency in collections revenue. cases.660 accordance with the provision might With respect to one-time Several industry commenters noted prevent a debt collector from reaching implementation costs, many debt ambiguities regarding how the proposed the consumer entirely.662 collectors will incur costs to revise their telephone call frequency limits would A creditor trade association systems to track telephone call work if a consumer has multiple debts commenter provided some data that frequencies. Such revisions could range or if there are multiple consumers on an helps to characterize the delays in from small updates to existing systems account. These commenters argued that collection that result from reduced calls to the introduction of completely new managing these ambiguities would lead made by creditors. The commenter cited systems and processes. The Bureau to additional ongoing costs of two unrelated randomized controlled understands that larger debt collectors compliance. As discussed in part V, in trials conducted by two of its members, generally already implement system the final rule the Bureau has clarified in both automotive lenders. The trials limits on call frequency to comply with the official commentary how debt estimated the impact on the likelihood client contractual requirements, debt collectors should count calls in various of accounts becoming more severely collector internal policies, and State and circumstances. This should reduce the delinquent (i.e., roll rates) by randomly local laws.658 Such debt collectors ongoing costs of compliance with these reducing calls to consumers at risk of might need only to revise existing provisions compared to the proposal. becoming 31, 61, or 85 days past due on calling restrictions to ensure that The final telephone call frequency their accounts.663 The first trial reduced existing systems track telephone calls in provisions may cause many debt calling from an average of 1.06 call a manner consistent with the new collectors to place telephone calls less attempts per day to an average of 0.76 provision. Larger collection agencies frequently than they currently do. This call attempts per day. The figures might also need to respond to client decrease in telephone calls may impose presented showed substantial increases requests for additional reports and audit ongoing costs on debt collectors by in roll rates, but no confidence intervals items to verify that they comply with increasing the time it takes to establish were presented. The second trial the provision, which could require these contact with consumers, all else equal. reduced calling from three calls per agencies to make systems changes to Most debt collectors currently rely telephone number per day to three calls alter the reports and data they currently heavily on telephone calls as a means of per consumer per day then to two calls produce for their clients to review. establishing contact with consumers, per consumer per day. The reduction in Smaller debt collectors and collection although other provisions of this final calls generally increased roll rates, but law firms are less likely to have existing rule are intended to facilitate debt the differences were often not systems that track or limit calling collectors’ use of electronic statistically significant. frequency and may therefore face larger communications. While debt collectors One debt collection industry costs to establish systems to do so. generally send letters in addition to commenter stated that it requires an However, many smaller debt collectors calling,661 the Bureau understands that average of 16 calls to reach each report that they generally attempt to response rates to letters can be quite consumer. This commenter argued for a reach each consumer by telephone only low. If contact with consumers is limit of 16 calls per week on the basis one or two times per week and generally delayed, it will delay collection revenue that most consumers have multiple do not speak to a consumer more than and may reduce revenue if consumers numbers that have to be tried before a one time per week, which suggests that who are reached later are less willing or right-party contact (RPC) is achieved, their practices would afford them a able to repay the debt. In addition, if the but the commenter did not provide any presumption of compliance (and actual debt collector is unable to reach the information as to the expected impact of compliance, depending on the consumer during the period that the the proposed frequency limits. Another circumstances) with respect to owner of the debt permits the debt industry commenter, a large debt buyer, telephone call frequencies under the collector to attempt to collect the debt, stated that, when searching for a final rule.659 For such debt collectors, consumer, it places between 50 and 75 existing policies may be sufficient to 660 The impact might be greater if consumers calls per debt before achieving RPC. ensure compliance with the provision, could not consent to more frequent contact. For This commenter argued for 15 calls per although they may incur one-time costs example, if a debt collector reached a consumer on week, again noting that consumers the telephone and the consumer said it was not a to establish systems for documenting good time to speak, then the rule would permit the having multiple telephone numbers compliance. debt collector and consumer to agree to speak again increases the number of calls needed to With respect to ongoing costs of at a specified time within less than one week. See achieve an RPC. The commenter compliance, the Bureau expects that the the section-by-section analysis of § 1006.14(b)(3)(i); reported that, if the proposed limits see also comment 14(b)(2)(ii)–2.iii, which clarifies telephone call frequencies specified in that a factor that may rebut the presumption of a were increased to 15 per week, 9,629 § 1006.14(b)(2)(i)(A) could reduce some violation is whether, if the exclusion in more of their consumers would enter a debt collectors’ ability to reach § 1006.14(b)(3)(i) does not apply, the debt collector repayment plan and 2,459 fewer would consumers, particularly when the debt placed a telephone call in response to the have their account forwarded for consumer’s request for information. Similarly, the collector has not yet established contact Bureau expects that debt collectors will be largely litigation. The commenter, however, did with a consumer. These impacts are unaffected by the application of the telephone call discussed below. The Bureau’s frequencies to location contacts with third parties 662 If the provision were to cause some debt understanding, based on feedback from because the Bureau understands that, while collectors to lose revenue for this reason, the location calls may be made to several numbers, they amounts not collected would generally be small entity representatives and other do not generally involve frequently calling each transferred to another party: either to consumers (if industry outreach, is that the frequency number. the amounts were never collected) or to another of one telephone conversation per week 661 In the Bureau’s survey, 85 percent of debt collector (if the amounts were collected in final § 1006.14(b)(2)(i)(B) is unlikely respondents who had been contacted by a debt through further collection efforts, including through to affect debt collectors’ ability to collector said that they had been contacted by a lawsuit). telephone and 71 percent said that they had been 663 Because these trials were conducted by first- contacted by letter. Respondents were asked to party creditors seeking to collect on accounts in 658 See CFPB Debt Collection Operations Study, select all ways in which they had been contacted. relatively early stages of delinquency, their results supra note 34, at 28–29. CFPB Debt Collection Consumer Survey, supra note may not apply to accounts subject to third-party 659 See id. at 29. 16, at 29–30, table 14. debt collection.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00139 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76872 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

not provide any insights into its The Calling Data show that, in the contacted only after more than 50 or 60 methodology or the statistical precision first eight weeks of collections, the calls have been placed. of its estimated effects. overall frequency of call attempts to There are limitations to using the data Some debt collectors do not place consumers who have not yet spoken discussed above to make inferences telephone calls frequently enough to be with the debt collector declines slowly. about how the telephone call affected by the telephone call Roughly 40 percent of consumers frequencies in the final rule may affect frequencies that establish a presumption receive more than seven calls per week debt collectors’ ability to reach of a violation. While the Bureau in the first four weeks, but this drops to consumers. This is in part because understands that some debt collectors 27 percent by week eight. Although the establishing contact depends on factors regularly call consumers two to three overall distribution of contact attempts other than the number of calls made times per day or more, other debt changes slowly from week to week, the (e.g., the time of day called) and in part collectors have told the Bureau that they data show that, over time, some because debt collectors who wish to seldom call more than once or twice per consumers get called more, while others operate within the presumption of week. These differences may reflect get called less. Consumers with whom compliance might change their contact different debt types and collection an RPC has been established and who behavior in ways that permit them to strategies. For example, smaller debt made no payment and consumers for reach a given number of consumers with collectors frequently retain debts whom RPC has not been achieved tend fewer calls, as discussed further below. indefinitely, and they may face less to receive the most collection calls. In addition, other aspects of the rule, pressure to reach consumers quickly Consumers who have engaged but made including the provision that clarifies the than debt collectors who collect debts a partial payment receive fewer calls. legal status of limited-content messages, for a limited period. Debt collectors who Moreover, the debt collector who could make it easier for debt collectors focus on litigation may also place less provided the Calling Data engages in to reach consumers with fewer calls. emphasis on establishing telephone ‘‘call sloping,’’ meaning that it places The data discussed above may not be communication with consumers. fewer total calls each week that it works representative, meaning that some debt Some debt collectors have indicated a portfolio of debts. collectors might need more or fewer that frequent calling is especially The Calling Data show that, for the calls to reach similar numbers of consumers. Overall, however, the important if the debt collector has debts included in that data set, multiple potential telephone numbers available data suggest that reducing consumers who take longer to reach are and does not know the best way to reach telephone call frequencies to levels that not less likely to pay. Although the the consumer.664 Additionally, some afford a debt collector a presumption of probability that each call results in an debt collectors specialize in attempting compliance would somewhat reduce the RPC declines with successive calls, the to collect debts for which the creditor ability of debt collectors to reach rate at which RPCs are translated into has lost contact with the consumer, and consumers by telephone within a few payments increases steadily through at frequent call attempts to establish months, but that the reduction is likely least the first 50 calls. As a result, an contact with the consumer may be to be limited to a relatively small RPC that is achieved in any of the first especially important for such debt fraction of debts. This could affect 50 calls is approximately equal in value collectors. primarily debt collectors who receive For debt collectors who currently call to the debt collector as an RPC that is placements of debts for four to six consumers more frequently than the achieved with fewer calls, suggesting months and do not engage in litigation. presumptive cap but who will choose to that call attempts remain important to Such debt collectors could lose revenue limit their calling such that they receive debt collection even after many calls if they are unable to establish contact a presumption of compliance, the have been attempted. with consumers or if collections based telephone call frequencies could affect Summary data provided by some on telephone calls become less effective when and if they establish other large debt collectors indicate that and, as a result, creditors place more communication with consumers. The the number of calls needed to reach debts with debt collectors specializing Bureau does not have representative consumers can vary considerably, but in litigation. data that permit it to quantify how the that the majority of debts would not be To illustrate potential effects of the telephone call frequencies would affected or would be affected very little provision on debt collector revenue, the impact how long it takes to establish by reducing current telephone call Bureau used the Calling Data to contact or whether contact is frequencies to levels that would afford simulate the effect of the provision established at all. However, the Bureau the debt collector a presumption of under an assumption that the debt has analyzed microdata on outbound compliance under the final rule. These collector limits telephone call frequency calling from one large collection agency data indicate that 50 percent or more of such that it would receive a (‘‘Calling Data’’) that helps illustrate the consumers who are ultimately reached presumption of compliance under the potential impact of the telephone call by these debt collectors are reached rule, under specific assumptions about frequencies. While the data from this within the first seven calls overall (not how limiting calls would affect agency may not be representative of the per week), though other debt collectors collections. That is, the Bureau created market as a whole, the results of the have indicated that it takes 15 to 21 a ‘‘but-for’’ version of the Calling Data Bureau’s analysis of the data are calls to reach 50 percent of such in which calls that would exceed those generally consistent with summary consumers. These data also indicate that limits were assumed to have been either information shared by other large reaching 95 percent of consumers may delayed or eliminated, and the Bureau collection agencies.665 take between 50 and 60 calls, meaning compared RPCs and payments in this that 5 percent of consumers reached are ‘‘but-for’’ data with the actual outcomes 664 See, e.g., Small Business Review Panel Report, achieved by the debt collector. This is letter from FMA Alliance Ltd., supra note 37, at are part of the Bureau’s routine market-monitoring at best a rough approximation of the appendix A–6. Multiple industry and trade efforts. Although most debt collectors are small effects of the provision, both because it association commenters on the proposal echoed this firms, evidence suggests that a majority of debt sentiment. collected is collected by collection agencies with relies heavily on the assumptions made 665 The summary information was shared with 100 or more employees. See CFPB Debt Collection and because it is based on the data of Bureau staff during industry outreach meetings that Operations Study, supra note 34, at 7. one particular debt collector, and may

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00140 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76873

not be representative of other firms in because in reality the debt collector was RPC in the simulation, then the amount the industry. only contracted to collect on the debts of any payments made by the consumer The Bureau created two versions of its in the data for up to 25 weeks. Version is unchanged. If the consumer received simulation analysis, one of which uses 1 implicitly assumes that the probability an RPC in the original data but did not more conservative assumptions as to the that a call results in an RPC does not receive any RPC in the simulation, the impact of limiting telephone calls on depend on how much time has passed Bureau assumed that any payments successful contacts and collections. since collection began, only on the recorded in the original data did not However, the Bureau believes that even number of calls that have been made. occur for purposes of the simulation. the more conservative version of this In a second, more aggressive version Table 2 shows the results of the analysis likely overstates the potential of the simulation (Version 2), the simulation analysis described above. effects of reducing call frequency Bureau assumed that any calls that Under Version 1, the reduced call because it cannot reflect any changes would not be made because they exceed frequency would reduce first RPCs by the debt collector would make to its seven calls per week are eliminated, 2.76 percent of the first RPCs and calling strategy in response to the rather than shifted forward. When a dollars collected by 1 percent.669 The reduced frequency. That is, one would consumer’s first RPC would have average first RPC would be delayed by expect a rational collection firm to occurred on a call that would not be less than one week. These effects are not strategically choose which calls to made in a given week, the Bureau treats evenly distributed across consumers, eliminate or delay in order to reduce the data for that debt as censored as of however. In the simulation, the debt call frequency, while the Bureau’s that week.667 collector is much more likely to miss an analysis must to some extent select calls The Bureau made additional RPC or payment if it calls multiple arbitrarily. In particular, at least for the assumptions that were common to both telephone numbers for a consumer.670 debt collector who provided data to the versions of the simulation. For inbound For consumers where the debt collector Bureau, debts with multiple telephone calls, that is, calls from consumers to calls only one telephone number, hardly numbers would be most likely to be the debt collector, the Bureau assumed any miss an RPC in the simulation, and affected by a decision to limit call that the calls were not delayed or the average delay is almost zero. This is frequency. The Bureau is not able to eliminated. Thus, the Bureau is because the debt collector rarely calls a identify telephone type (such as mobile implicitly assuming that inbound calls particular telephone more than seven vs. landline, or work vs. home) in the are prompted by letters from the debt times per week. In contrast, for data, but debt collectors are often able collector or other external factors, rather consumers where the debt collector to do so. The Bureau would expect debt than by a number of calls.668 The calls five or more telephone numbers, collectors in similar situations to omit Bureau made additional assumptions to the simulation predicts that the reduced calls to less promising telephone simulate the effect on payments. The call frequency will eliminate more than numbers, rather than to call the same Calling Data indicate if the consumer 7 percent of RPCs and delay the numbers, and to cease calling earlier in ever paid and how much, but they do remaining RPCs by almost two weeks. the process. not always indicate when payment was The assumptions of Version 2 suggest In the first, more conservative version received—the Bureau observes the a more substantial effect on RPCs and of the simulation (Version 1), the timing of payments only if the consumer collections, although the Bureau notes Bureau assumed that all calls the debt made payment over the telephone. again that even Version 1 likely collector did not make each week were About half of all consumers in the data overstates the potential effect of the simply shifted to the next week.666 The who make at least a partial payment do provision. The simulation predicts that Bureau assumed that any successful so without ever having an RPC. For the RPCs would decline by 15.7 percent, RPCs that occurred after the 25th simulation, the Bureau assumed that, if and dollars collected would decline by simulated week would never occur the debt collector achieved at least one 7.7 percent.

TABLE 2—RESULTS OF SIMULATION ANALYSIS

Average delay Percent change in remaining Percent change Version Assumed effect of call frequency provision in RPCs within RPCs in dollars collected 25 weeks (in weeks) within 25 weeks

Version 1 ...... Calls above seven roll to next week ...... ¥2.76 0.85 ¥1.04 Version 2 ...... Calls above seven eliminated ...... ¥15.7 0 ¥7.7

Overall, there is reason to expect that potential effect of the final rule’s simulation ignores any changes debt the simulation analysis overstates the telephone call frequencies because the collectors would make to mitigate the

666 For example, if the debt collector called a have a successful RPC, only that there was no RPC consumers eventually return a call in response to particular consumer 10 times in the first week, eight up until that week. The Bureau then calculates the repeated missed calls on their telephones. times in the second week, and five times in the percentage of debts with an RPC by the 25th week 669 The change in payments is less than the third week, in the Bureau’s simulation, the last of collections using the Kaplan-Meier product limit change in RPCs both because some consumers pay three calls in the first week would become the first estimator for the survival function, a standard tool without an RPC (and the Bureau assumed this did three calls in the second week. The second week for measuring rates of an outcome when some not change in the simulation) and because would then have a total of 11 calls, and the last four observations are censored. It is necessary to assume consumers in the data who had an earlier first RPC, calls would become the first four calls in the third that such consumers are censored because in reality and thus were less likely to be affected by the week. The third week would then have eight calls, after an initial RPC, the debt collector generally frequency limits, were also more likely to pay in so the last call would become the first call of the changes its calling behavior, particularly if it full. fourth week, and so on. obtains a promise to pay. 670 The Bureau does not observe in the data how 667 That is, the Bureau assumes that it does not 668 The debt collector who provided the data does many telephone numbers the consumer has, only know when or whether that consumer would ever not leave voicemails, but it is possible that how many the debt collector chooses to call.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76874 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

effects of reduced call frequency. The created using confidential information debt collectors can reduce the number simulation also assumes that debt to the extent that such materials do not of calls needed to establish an RPC by collectors will not take advantage of the identify, either directly or indirectly, purchasing higher-quality contact flexibility afforded by the rebuttable- any person to whom the confidential information from data vendors. Such presumption approach to call more information pertains.673 As such, it purchases will be worthwhile if their frequently in certain circumstances. would not be appropriate to identify the cost is less than the additional revenue Nevertheless, certain assumptions that debt collector explicitly. In addition, expected from higher contact rates. the Bureau makes for simplicity likely disclosing the total number of calls In addition, and as discussed below, reduce the predicted impact of the likewise would be inappropriate the Bureau’s final rule also includes provision. In particular, in Version 1 the because, for large debt collectors such as provisions that could reduce the legal Bureau assumes that a call with an RPC the one who provided the calling data, risks associated with other means of that is shifted later due to reduced call the total number of calls placed in a six- communication, such as voicemail frequency will remain an RPC. This may month period is likely sufficient to messages, text messages, or email, not be true in practice. Empirically, the identify the debt collector. The Bureau which could enable debt collectors to probability that a call results in an RPC fully described the methods used to reach consumers more effectively with declines over time—this is evident in calculate its simulation analysis in the fewer calls. This could mitigate the the data examined by the Bureau and is proposal and has repeated that impact of limiting telephone call consistent with input from industry description above. Finally, the frequencies to establish a presumption stakeholders. If consumers are less discussion of the analysis in the of compliance and might mean that the likely to answer the telephone as time proposal, repeated above, not only net effect of the rule would be to passes, irrespective of the number of described the Bureau’s assumptions but increase the likelihood that debt calls debt collectors have made, also discusses the effect that each collectors are able to reach consumers. reducing call frequency could reduce assumption has on the outcome of the In addition, debt collectors who are payments and revenue by a larger analysis in some detail. The Bureau unable to reach consumers because they fraction than the simulation suggests acknowledges the limitations of the wish to operate within the presumption (assuming no re-optimization by debt Calling Data, particularly for of compliance might still pursue such collectors).671 extrapolating to the market as a whole, debts through litigation. To the extent A trade group commenter argued that but finds that these data provide useful that frequent call attempts play a more the Bureau’s analysis of the Calling Data information to at least characterize the important role in collecting certain was unreliable for several reasons. The scale of the probable effects of the final types of debt relative to others, some commenter asserted that the Bureau’s rule. debt collectors might shift their business analysis was invalid because it did not A State Attorney General commenter toward collecting those types for which describe the sample size, because it did argued that the Bureau had no evidence frequent calls are less important. not present ‘‘methodology’’ or that a frequency limit of seven call Alternative Approaches To Limiting the ‘‘algorithms,’’ and because it did not list attempts per seven-day period would Frequency of Telephone Calls and assumptions. The Bureau believes the yield more consumer engagement and Telephone Conversations analysis does provide information payments than a lower limit such as relevant to understanding potential three call attempts per week. The The Bureau considered alternatives to costs of the rule. The Calling Data Bureau acknowledges that it does not the final rule’s rebuttable-presumption contains proprietary information of the have sufficient evidence to quantify the approach to telephone call frequencies submitter that includes confidential differences in consumer engagement or on debt collector telephone calls and commercial information and that is payments from different telephone call telephone conversations. The potential protected by the Bureau’s regulations on frequencies. However, the Bureau notes benefits and costs of those alternatives the protection of confidential that, in its analysis of the Calling Data, to consumers and covered persons information.672 The Bureau’s a limit of seven calls in a seven-day relative to the final rule are discussed confidentiality regulations permit period led to measurable reductions in briefly below. disclosure of materials derived from or RPCs and payments, and that changing The proposal would have established the assumptions in the simulation a bright-line limit on telephone call 671 Another assumption that might reduce the analysis of the calling data had a frequency rather than a rebuttable predicted effect of reduced call frequency in both measurable effect on RPCs and presumption. Specifically, proposed versions is the assumption that payment is tied to § 1006.14(b)(1) set forth the general whether or not the first RPC occurs. For instance, payments even with the same weekly in Version 1, the Bureau assumed that a consumer limits. This provides some basis for prohibition, § 1006.14(b)(2) described would not pay only if the first RPC would have finding that limiting calls further would bright-line frequency limits for occurred after the 25th week in the simulation. Yet reduce payments further for debt telephone calls and telephone about a quarter of consumers in the data who conversations during a seven-day eventually pay some portion of their debt had at collectors who are similar to the debt least two RPCs. It may be that the subsequent RPCs collector who provided the Calling Data. period, and proposed § 1006.14(b)(3), were necessary for the payment to occur, but the Debt collectors could take steps to (4), and (5) described telephone calls Bureau’s analysis did not track whether subsequent reduce the number of calls necessary to excluded from the frequency limits, the RPCs occurred after the 25th week under the effect of complying with the frequency simulated frequency reductions. The Bureau also establish contact and mitigate any lost notes that there is an implicit assumption in both revenue from limiting call frequency so limits, and a definition, respectively. A versions of the simulation that could lead to that they maintain a presumption of bright-line limit on telephone call overstating the effect of the call frequency compliance. As indicated, if multiple frequency would provide greater clarity reduction. The simulation assumes that, if all RPCs for a consumer were eliminated, then the consumer telephone numbers are available, debt to consumers and debt collectors about would never pay. Given that, as noted above, a collectors might reduce their calls to whether calling practices comply with substantial number of consumers in the original numbers that they can identify as being the FDCPA. For example, under the data pay despite having no RPCs, it is possible that less likely to yield a successful contact. proposal, a debt collector who did not some consumers whose RPCs were eliminated by the reduced call frequencies would nonetheless pay In addition, the Bureau understands that place telephone calls to consumers more eventually. than seven times in a seven-day period 672 See 12 CFR part 1070. 673 See 12 CFR 1070.41. would know that it was complying with

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00142 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76875

the provision, whereas, under the final develop systems that treat telephone speak to any of the company’s rule, a debt collector following the same calls and other communications representatives or associates. Section practice would also need to consider equivalently for purposes of tracking 1006.2(b) and (d), which define the whether the presumption of compliance contact frequency. terms attempt to communicate and might be rebutted in the case of The Bureau also considered a communication, respectively, provide particular consumers or accounts. This proposal that would have limited the that a limited-content message is an could result in greater compliance costs number of calls permitted to any attempt to communicate but is not a and greater risk of litigation for debt particular telephone number (e.g., at communication. collectors compared with the proposal. most two calls to each of a consumer’s On the other hand, the final rule may landline, mobile, and work telephone Potential Benefits and Costs to provide greater flexibility to debt numbers). The Bureau considered such Consumers collectors and additional benefits to a limit either instead of or in addition As discussed below under ‘‘potential consumers compared with the proposal. to an overall limit on the frequency of benefits and costs to covered persons,’’ For consumers, the final rule may telephone calls to one consumer. Such many debt collectors currently do not provide additional benefits in cases an alternative could potentially reduce leave voicemail messages for consumers where seven or fewer telephone call the effect of frequency limits on debt because of the risk of litigation. The attempts per week would be harassing, collector calls if it permitted more total Bureau expects that, by clarifying that such as rapid succession calling. For calls when consumers have multiple ‘‘communication’’ for purposes of the debt collectors, the final rule may make telephone numbers. Such an approach FDCPA does not include the limited- it more possible to reach consumers if could impose smaller costs on debt content message, the rule will make they are unable to make contact within collectors in some cases compared to debt collectors more likely to leave seven call attempts in a week and the final rule by making it easier to voicemail messages if they are unable to additional calls would not be harassing. contact consumers for whom debt reach consumers by telephone. The Bureau also considered a broader collectors have multiple telephone version of § 1006.14(b)(1) that would numbers. At the same time, such an In general, an increased use of have set a numerical prohibition on approach might provide smaller voicemail messages should make it repeated or continuous attempts to consumer benefits compared to the final more convenient for consumers to contact a person by other media, such rule by potentially permitting a high communicate with debt collectors as by sending letters, emails, or text frequency of calls in some cases. Some because consumers will be better able to messages to a person in connection with consumers could receive (and some debt arrange a discussion at a time that is the collection of a debt. Such an collectors could place) more telephone convenient for them rather than at a approach could provide additional calls simply based on the number of time when the debt collector happens to benefits to consumers if they are telephone numbers that certain reach them. Related to this, some harassed or abused by frequent consumers happened to have (and that consumers express annoyance at communication from debt collectors debt collectors happened to know receiving repeated calls from callers through such media. about). Such an approach also could who do not leave messages. To the However, during the SBREFA process, create incentives for debt collectors, for extent that debt collectors respond to some small entity representatives example, to place telephone calls to less the rule by leaving messages when a suggested that compliance with a rule convenient telephone numbers after consumer does not answer the that limited the frequency of exhausting their telephone calls to telephone, the provision might help communications by media other than consumers’ preferred numbers. address that problem. telephone calls would be more costly 3. Limited-Content Messages If more debt collectors are willing to than compliance with a rule that leave messages, it may lead to an applied only to calls. These small entity Section 1006.2(j) defines limited- indirect benefit to consumers by representatives indicated that, while content message as a voicemail message reducing the number of unwanted call many existing debt collection systems for a consumer that includes all of the attempts without reducing the already track the frequency of telephone content described in § 1006.2(j)(1), that likelihood that consumers communicate calls, modifying systems to track may include any of the content with debt collectors. Although some communication by other media would described in § 1006.2(j)(2), and that debt collectors may leave frequent be significantly more expensive. includes no other content. In particular, messages or continue to call frequently As discussed in part V, because debt § 1006.2(j)(1) provides that a limited- despite having left messages, an collectors do not presently engage in content message must include all of the industry trade publication recommends widespread use of electronic following: A business name for the debt a best practice of waiting three to seven communications, the Bureau concludes collector that does not indicate that the days after leaving a message to give the that it does not have sufficient debt collector is in the debt collection consumer an opportunity to return the information to warrant applying business, a request that the consumer call.675 During the meeting of the Small numeric limitations to electronic reply to the message, the name or names Business Review Panel, small entity 674 communications. Debt collectors will of one or more natural persons whom representatives indicated that limited- still need to ensure that their the consumer can contact to reply to the content messages would reduce the communications other than telephone debt collector, and a telephone number need for frequent calling.676 One calls do not violate the FDCPA section that the consumer can use to reply to commenter on the proposal, a large debt 806’s general prohibition on the debt collector. Section 1006.2(j)(2) buyer, indicated the same. Thus, some harassment, oppression, and abuse, but provides that a limited-content message consumers may experience reduced the final rule will not require them to also may include one or more of the numbers of calls if more debt collectors following: A salutation, the date and 674 The Bureau received no comments advocating time of the message, suggested dates and 675 insideARM, Operations Guide: Call Volume that any frequency limits be applied to mailed times for the consumer to reply to the communications, and the Bureau is unaware of 10 (Nov. 14, 2014). other evidence suggesting that would support such message, and a statement that if the 676 Small Business Review Panel Report, supra a limit. consumer replies, the consumer may note 37, at 25.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76876 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

leave messages and wait for a return overhearing a limited-content message mobile devices generally are not played call. would immediately recognize it as a in a way that allows bystanders to Debt collectors cannot be certain that message from a debt collector. These overhear. A voicemail on a mobile a voicemail message will be heard only commenters asserted that as a result, device may have no more risk of third- by the consumer for whom it was left. consumers would suffer privacy harms party disclosure than other forms of Some consumers could be harmed by an from the use of limited-content communication, and in some increase in limited-content messages, messages. Whether or not the circumstances may have less risk. either because they are harassed by commenters are correct in their Survey results indicate that frequent messages or because the argument, the changes the Bureau has consumers are concerned about third messages increase the risk of third-party made to the required content of the parties overhearing voicemail messages disclosure. Although the message itself limited-content message in the final rule would not convey any information left by debt collectors, with nearly two- should, on balance, reduce the privacy thirds of consumers saying it is very about the debt, the message will include risks to consumers. By including the a business name for the debt collector important that others do not hear or see name of the company (that does not that does not indicate that the debt a message from a creditor or debt indicate that the debt collector is in the collector is in the debt collection collector, as shown in Table 3 below. debt collection business) but not the business and some third parties who However, most respondents also said hear the message may assume or consumer, the limited-content message that they would prefer that a voicemail discover that the caller is a debt will both sound less unique (the message from a debt collector indicate collector attempting to collect a debt commenters noted that few legitimate that the caller is attempting to collect a from the recipient. On the other hand, businesses currently leave messages debt. Even among consumers who said the provision might lead debt collectors without leaving their business name) it was ‘‘very important’’ that others not who currently leave more detailed and will not identify the call as being see or hear messages about debt messages that pose greater risk of intended for a particular consumer. In collection, 63 percent said they revealing the purpose of the call to third addition, the Bureau notes that the preferred that the purpose of the call be parties to switch to messages that pose potential scope of harm from third included in a message from a creditor or less risk. In such instances, the impact parties overhearing voicemail messages debt collector attempting to collect the of the provision may be to reduce the is smaller than it may have been in past debt. This suggests that many likelihood of third-party disclosures. years and is shrinking. As more consumers either do not expect third Multiple consumer advocate and consumers transition away from parties to overhear voicemail messages other commenters argued that the landline telephones to personal mobile left for them or attach greater proposed limited-content message phones, the possibility of a third party importance to knowing what the call is would quickly become associated with overhearing a voicemail message about than to the risk a third party will debt collectors, such that a third party becomes less likely, as voicemails on overhear the message.

TABLE 3—PREFERENCES REGARDING OTHERS SEEING OR HEARING DEBT COLLECTOR MESSAGE [Percent]

Consumers contacted Importance of others not seeing or hearing a message All consumers about a debt in collection

Very important ...... 64 65 Somewhat important ...... 23 24 Not at all important ...... 14 10

Potential Benefits and Costs to Covered interpreting the FDCPA not to require call attempts without leaving such Persons the mini–Miranda warning in a limited- messages. For example, consumers who content message, which will reduce do not answer calls from callers they do The Bureau understands that many legal risks associated with such not recognize might return a voicemail debt collectors avoid leaving voicemail messages. message. If so, the provision could messages, or leave them only under Debt collectors may indirectly benefit permit debt collectors to reach such limited circumstances, because of the from clarification of the type of consumers with fewer contact attempts. legal risk associated with doing so. messages that may be left because Commenters were divided on whether Currently, debt collectors leaving a messages may make it easier to establish voicemail message for a consumer either contact with consumers. Currently, the proposed limited-content message do not include the statement that the many debt collectors limit or avoid would increase the ability of debt call is from a debt collector (the so- leaving voicemail messages for fear of collectors to reach consumers. An called ‘‘mini–Miranda’’ warning) and FDCPA liability.677 Leaving voicemail industry trade group commenter and a risk being deemed in violation of messages may be a more efficient way State Attorney General commenter FDCPA section 807(11) or include that of reaching consumers than repeated argued that consumers would not statement and risk that the existence of respond to the proposed limited-content a debt will be disclosed to a third party 677 In the Bureau’s Debt Collection Operations messages and would treat them as spam hearing the message and that they will Study, 42 of 58 respondents reported sometimes calls. A different industry trade group be deemed in violation of FDCPA leaving voice messages. Of those that do leave voice commenter argued that the proposed messages, many reported leaving them only under limited-content message would in fact section 805(b). The provision in the certain specific circumstances. See CFPB Debt final rule will reduce both direct and Collection Operations Study, supra note 34, at 29– increase consumer engagement and indirect costs to some debt collectors by 30. reduce the need for repeated telephone

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76877

calls. As discussed above, the Bureau settled or discharged in bankruptcy. statements by electronic means only.680 has revised the requirements for the Section 1006.30(b)(2) creates some Because consumers who experience limited-content message in ways that exceptions to this prohibition. debt collection differ from consumers should decrease the likelihood that The Bureau understands, based on its who do not,681 these estimates would be consumers treat the messages as spam, market knowledge and outreach to debt more accurate if the Bureau knew how such as by requiring debt collectors to collectors, that debt collectors generally many consumers who experience debt include the name of the collection firm do not sell, transfer, or place for collection have opted into receiving that does not indicate that the debt collections debts (other than in electronic-only (paperless) disclosures collector is in the debt collection circumstances covered in the from their creditors. It is not clear business. As such, the Bureau believes exceptions) if they have reason to whether consumers who experience that it is more likely than not that the believe the debts cannot be validly debt collection would be more or less provision will make it easier for debt collected because they have been paid digitally engaged with disclosures than collectors to establish contact with or settled or discharged in bankruptcy. their counterparts without debt consumers. The final rule provides an exception for collection experience.682 The provision may also reduce the transfer of secured debt that has been direct costs of voicemail-related discharged in bankruptcy, provided that Other data from the Debt Collection litigation, which can be large.678 While the debt collector provides notice to the Consumer Survey show that about 15 the Bureau does not have data on the transferee that the debt has been percent of consumers indicate that costs to debt collectors of defending discharged. The Bureau understands email is their most preferred method of such litigation, some debt collectors that, if debt collectors transfer such being contacted about a debt in have suggested that resolving an secured debt, they generally already collection, with almost half of individual lawsuit typically costs provide such notice in the ordinary consumers indicating that a letter is $5,000 to $10,000, and resolving a class course of business. Therefore, the their most preferred method, and about action could cost much more. Moreover, Bureau expects the benefits and costs of a quarter identifying a telephone as their debt collectors report that the large this provision to be minimal. most preferred method.683 At the time of majority of threatened lawsuits are the survey very few debt collectors 5. Electronic Disclosures and settled before a suit is filed, so the communicated by email, whereas many Communications frequency of filed lawsuits substantially debt collectors communicated by understates how often debt collectors The final rule includes provisions that telephone and letter, so survey bear costs from claimed FDCPA clarify how debt collectors can respondents may have found it more violations.679 The Bureau anticipates communicate with consumers by email difficult to evaluate their preferences for that the clarification of the definition of and text message in compliance with receiving debt collection communication will significantly the FDCPA and the final rule. With communications by email. That said, reduce the legal risk to debt collectors respect to the validation notice, which the lower percentage for email may of leaving voicemail messages. most debt collectors currently provide suggest that consumers are more likely The provision generally does not by mail, § 1006.42 sets forth standards to prefer electronic communications for require debt collectors to incur new that debt collectors must meet if they periodic statements and similar costs because it does not require any send notices electronically. With respect disclosures than for debt collection debt collectors to change their policies to any communications about a debt, communications. Taken together, these regarding messages. However, in order § 1006.6(d)(3) through (5) specifies data suggest that a minority of to obtain benefits from the provision, procedures that debt collectors may use consumers—between 15 and 39 debt collectors who plan to adopt the to send an email or text message to a percent—might prefer electronic practice of leaving limited-content consumer about a debt such that the validation notices, while a majority—as messages will incur one-time costs to debt collector may obtain a safe harbor many as 69 percent—might prefer to develop policies and procedures to from civil liability under the FDCPA for receive electronic communications implement limited-content messages an unintentional disclosure of the debt (other than the validation notice) under the rule and to train employees to a third party. on these policies and procedures. Potential Benefits and Costs to 680 These estimates are based on data reported in 4. Prohibition on the Sale or Transfer of Consumers Bureau of Consumer Fin. Prot., The Consumer Certain Debts Credit Card Market, at 164–66 (Dec. 2017), https:// Today, most debt collectors generally files.consumerfinance.gov/f/documents/cfpb_ Section 1006.30(b)(1) prohibits a debt communicate with consumers by letter consumer-credit-card-market-report_2017.pdf. This collector from selling, transferring for and telephone. If the rule leads debt rate has increased every year since at least 2013. These rates were lower for private label and retail consideration, or placing for collection collectors to increase their use of email co-brand cards, suggesting that the product’s use a debt if the debt collector knows or and text messages, it will benefit case, acquisition channel, and consumer base should know that the debt was paid or consumers who prefer electronic composition may all affect both provider practices and consumer behavior. communications to letters or telephone 681 678 There were at least 162 voicemail-related See CFPB Debt Collection Consumer Survey, calls. supra note 16, at 15–17. Consumers who have lawsuits filed in 2015 under section 805(b) of the Many consumers appear to prefer to FDCPA, which prohibits third-party disclosures; of experienced debt collection tend to have lower these, 11 cases were class actions. In addition, at receive certain disclosures about incomes, be under age 62, and be non-white. least 125 voicemail-related lawsuits were pursued financial products by electronic means 682 An FDIC survey that addressed access to under section 807(11), which prohibits rather than mail. In 2016, of a sample of banking services found that the share of communicating with a consumer without providing respondents accessing bank accounts through the mini–Miranda disclosure; of these 49 cases were 203 million active general purpose online or mobile methods generally increased with class actions. See Small Business Review Panel credit card accounts, approximately 141 income and was lower for respondents aged 65 or Outline, supra note 36 at 69 n.104 (citing data million accounts (69 percent of all more. See Fed. Deposit Ins. Corp., 2017 FDIC provided by WebRecon, LLC). accounts) were enrolled in online National Survey of Unbanked & Underbanked 679 Households at 27 & table 4.4 (Oct. 2018), https:// Some debt collectors have reported that they servicing, of which approximately 80 receive approximately 10 demand letters for every www.fdic.gov/householdsurvey/. lawsuit filed and that FDCPA claims are typically million (39 percent of all accounts) 683 CFPB Debt Collection Consumer Survey, supra settled for $1,000 to $3,000. See id. at 69 n.105. opted into delivery of periodic note 16, at 23.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76878 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

instead of or in addition to paper consent. The Bureau does not believe Multiple commenters, including communications or telephone calls. that consumers will generally provide individual commenters, a State Attorney As discussed above with respect to E–SIGN consent if they do not have General commenter, and consumer the rule’s provisions regarding call ready access to email and the internet. advocate commenters, identified other frequency, most consumers In addition, under the final rule (and potential costs to consumers of the experiencing debt collection report that consistent with the proposal), all proposed electronic communications debt collectors call too often. The required disclosures sent in writing or provisions. Several commenters noted provisions regarding electronic electronically (including the validation that sending validation notices through communications may have the indirect notice sent as an initial communication) a hyperlink would be problematic effect of reducing call frequency. These must be sent in a manner that is because of the security risks of clicking provisions may cause debt collectors to reasonably expected to provide actual on links in emails from unknown substitute email or text messages for notice to the consumer, and in a form senders. In these commenters’ view, telephone calls, and email or text that the consumer may keep and access consumers would either decline to click messages may provide an easier channel later. This requirement reduces the risk on the links and so would not receive for consumers to ask debt collectors to that debt collectors will send validation important disclosures, or they would call less often. The benefits to notices electronically unless they are click and be more likely to click on consumers of reduced call frequency able to show that the electronic method dangerous links in the future. Multiple generally are discussed above. While used to send the validation notice is commenters raised the concern that debt some consumers prefer not to receive reasonably expected to provide actual collectors would make it difficult to opt electronic communications from debt notice to the consumer. out of electronic communications. collectors, the final rule’s provisions The risk of third-party disclosure may Under the final rule, for validation requiring opt-out notices and specifying be different for electronic debt notices that are not provided in the that consumers can limit the method of collection communications than for initial communication, the requirement communication should reduce any harm letters or telephone calls, although the to comply with the E–SIGN Act will to such consumers by making it Bureau is not aware of evidence that relatively easy to stop or restrict mean that consumers have consented to would indicate whether such risk is receive electronic communications attempts at electronic communication. higher or lower. Bureau data suggests Consumer advocates argued that some before the validation notice is sent that almost two-thirds of consumers electronically, which should help to specific groups may be adversely consider it very important that third impacted by specifying how validation address these commenters’ concerns. In parties do not hear or see a message addition, under the final rule (and notices may be sent by email, including 685 from a creditor or debt collector. To consistent with the proposal), all by hyperlink. In particular, these the extent that information in an commenters noted that older consumers required disclosures sent in writing or electronic disclosure is less likely or electronically must be sent in a manner and poorer consumers are generally less more likely to be seen or heard by third likely to have readily available access to reasonably expected to provide actual parties than communications by mail or notice, and in a form that the consumer the internet. The commenters expressed telephone, consumers receiving concern that these consumers, who may may keep and access later. This should validation notices electronically are reduce the risk that debt collectors will be vulnerable in other ways as well, likely to experience a benefit or a cost, might not receive required notices and send required communications in a respectively. manner that consumers are unlikely to be harmed as a result. The Bureau Receiving disclosures electronically agrees that some consumers may be less read or are unable to keep and access rather than in the mail may affect the later. In addition, the final rule requires likely than others to receive notices sent likelihood that consumers notice and electronically. In addition, in debt collectors that use electronic read the disclosures, which could lead communications to provide consumers quantitative testing completed by the to benefits or costs for consumers if they Bureau after publication of the proposal, with a reasonable and simple method to become more or less likely to opt out of such communications. the Bureau found a strong preference inadvertently ignore or miss important among consumers for receiving information. The Bureau does not have Potential Benefits and Costs to Covered validation notices through the mail and information about how frequently Persons much less willingness by consumers to consumers currently read validation receive validation notices by email or notices sent by mail or how often they Debt collectors who send required text message.684 would read disclosures sent disclosures electronically rather than As discussed in part V, the Bureau is electronically.686 sending letters could benefit because not finalizing the proposed exemption they would no longer have to print and to the E–SIGN Act and the alternative 685 See CFPB Debt Collection Consumer Survey, mail disclosures. The Bureau estimates procedures under which debt collectors supra note 16, at 38. that the marginal cost of mailing a could send required disclosures 686 One debt collector who currently validation notice is approximately $0.50 electronically, including through a communicates with consumers by email reports to $0.80, whereas the marginal cost of that 60 percent of consumers open at least one hyperlink, and is not finalizing the email and 25 percent click a link to review their sending the same communication by specific safe harbor for sending a options. See Small Business Review Panel Report, email would be approximately zero. The validation notice electronically in an supra note 37, at 7. As of 2015, about one-tenth of Bureau estimates that approximately initial communication with a consumer. all mass-market credit card consumers accessed 140 million validation notices are their online PDF periodic account statements in the 687 When the validation notice is not part final quarter of the year, which implies that fewer mailed each year. Assuming average of the initial communication, debt than one-half of consumers who receive only collectors will not be permitted to send electronic statements viewed those statements. See access paper periodic statements. In addition, it electronically without having Bureau of Consumer Fin. Prot., The Consumer notices of debts in collection may seem more Credit Card Market, at 134 figure 8 (Dec. 2015), serious or important than periodic statements and obtained the consumer’s E–SIGN https://files.consumerfinance.gov/f/201512_cfpb_ may be more likely to be opened. report-the-consumer-credit-card-market.pdf. 687 The assumption of 140 million validation 684 See CFPB Quantitative Testing Report, supra However, the Bureau does not have data about the notices per year is based on an estimated 49 million note 33, at 33. frequency with which consumers open or otherwise consumers contacted by debt collectors each year

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00146 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76879

mailing costs of $0.65, this would result choose to communicate with consumers of a consumer’s default, although theory in annual validation notice mailing electronically. alone gives no indication whether any costs of approximately $91 million per of these actual effects on recovery H. Potential Reduction of Access by year. If the rule leads a significant would be large enough to have practical Consumers to Consumer Financial percentage of validation notices to be significance. The additional clarity Products and Services sent electronically rather than by postal provided by the final rule regarding mail, it could reduce mailing costs for This rule contains a mix of provisions limited-content messages and the use of debt collectors by millions or tens of that will either restrict or encourage electronic communications should millions of dollars per year. certain debt collection activities, the net facilitate some communications and Debt collectors who use electronic impact of which is uncertain. Economic thereby tend to increase the expected communications may also benefit to the theory indicates that it is possible for value of recovery, while the call extent that some consumers are more changes in debt collection rules, such as frequency presumption may reduce the likely to engage with debt collectors those contained in this final rule, to expected value of recovery. First, to the electronically than by telephone or affect consumers’ access to credit extent that the rule raises costs for debt letter. During the SBREFA process, positively or negatively. Theory says collectors, debt collectors in theory several small entity representatives said that creditors should decide to extend could pass these costs on to creditors, that communication by email or text credit based on the discounted expected whether by charging higher contingency was preferred by some consumers and value of the revenue stream from that fees to creditors or by paying lower 690 would be a more effective way to engage extension of credit. This entails prices to creditors when buying debt. with them about their debts.688 One considering the possibility that the Second, the rule may reduce the amount debt collector who currently uses email consumer will ultimately default. of expected recovery, either by making to contact consumers reports that its Specifically, the discounted expected it less likely that consumers ultimately collection rates are greater than those of value of an extension of credit will be pay, or by reducing the amount that traditional debt collectors. While the discounted present value of the consumers pay in the event of a collection rates are likely to vary stream of interest payments under the settlement. Finally, the rule could according to debt collector, type of debt, terms of the credit agreement, increase the time it takes for debt collectors to recover. A rational creditor and related factors, clarifying the multiplied by the probability that the would discount future income more the legality of electronic communications consumer pays, plus the discounted further in the future it occurs, and so and disclosures will make it easier for expected value of the creditor’s recovery later payment of the same amount of debt collectors to test the efficacy of should the consumer default, times the money would reduce the discounted electronic communication and use it if probability of default. A profit- expected value of the payment. they find it effective, potentially maximizing creditor will only extend Alternatively, the rule might lower costs lowering costs and increasing the credit to a given consumer if this 689 for debt collectors, increase expected overall effectiveness of collections. expected value is positive. Anything that reduces the expected value of a recovery and decrease the time it takes Some commenters, including creditor’s recovery in the event of for debt collectors to recover amounts consumer advocates and individual 691 default, in general, will lower the owed. commenters, disagreed with the discounted expected value of the If the rule reduces the expected value principle of saving debt collectors extension of credit as a whole. This, in of extending credit, creditors might money by explicitly providing turn, may make potential extensions of respond in three ways: (1) Increase their alternative procedures and safe harbors credit with a discounted expected value standards for lending, with an aim of for electronic communication at, only slightly above zero to become reducing the probability of default; (2) according to these commenters, the negative, such that a creditor will be reduce the amount of credit offered, expense of consumers. As discussed less willing to extend credit. Likewise, thus reducing their losses in the event above, the Bureau believes that some anything that increases the expected of a default; or (3) increase interest rates consumers will benefit from electronic value of a creditor’s recovery increases or other costs of credit such as fees, thus communications, and that it can be the discounted expected value of the increasing their revenue from appropriate to reduce regulatory burden credit extension and may change the consumers who do not default. Which even in cases where there may be sign of the expected value of potential of these mechanisms any given creditor countervailing costs to some consumers. would pursue with respect to any given credit extensions that had negative credit transaction depends on the The Bureau understands that few debt expected values, such that a profit- specifics of the particular credit market. collectors currently communicate with maximizing creditor will be more consumers using electronic means. For willing to extend credit. debt collectors who do communicate 690 The Bureau notes that the degree of this pass- There are a few ways that the rule through depends on the relative degree of market with consumers electronically, the rule might increase or decrease the expected power held by debt collectors and creditors. If requires them to provide a method for value of creditors’ recovery in the event creditors have more market power, debt collectors opting out of such communications. The will have limited ability to demand higher fees or lower wholesale prices. Many comments on the Bureau understands that such methods 689 For purposes of this discussion, the Bureau Small Business Review Panel Outline indicated that are common features of services that ignores risk preferences and assumes that creditors debt collectors have little market power in their provide the ability to send electronic are risk neutral. That is, while a risk-averse decision interactions with creditors, which is consistent with communications to consumers. The maker would prefer a certain payment of $100 to little pass-through of additional costs. See, e.g., an uncertain investment with expected value of Small Business Review Panel Report, supra note 37, Bureau therefore does not anticipate $100, the discussion in this section assumes at 16–17. that these requirements will impose creditors are indifferent between these options. 691 Because creditors are generally not subject to significant costs on debt collectors that Creditors may be risk averse to some degree, such the FDCPA, creditors could also respond to changes that they would prefer the certain investment to the to debt collection rules by changing their decisions gamble, or even risk seeking, such that they prefer about whether to use third-party debt collectors or and an assumption that each receives an average of a gamble with the prospect of a higher return. The to collect debts themselves. The option to move approximately 2.8 notices during the year. theoretical argument described here does not hinge debt collection activities ‘‘in house’’ could reduce 688 See, e.g., Small Business Review Panel Report, on creditors’ risk preferences—the Bureau makes any impact of the final rule on the costs of supra note 37, at appendix A. this assumption solely for ease of exposition. recovering unpaid debts.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00147 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76880 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

A number of industry and other some important limitations, particularly loan balance exceeds the value of the commenters agreed with the general regarding extrapolating its results to the car, most delinquent automobile debt is principle that debt collection effects of the rule. Most importantly, it resolved through repossession. The fact restrictions may reduce access to credit, considers a wide variety of types of debt that the Fonseca Study nonetheless although these comments generally did collection laws, including provisions found a moderately large effect on not specifically address the analysis with limited consumer protection automobile balances suggests that above. One commenter argued that aspects. Specifically, a majority of the possibly the study’s methodology was access to credit is not always a good debt collection law changes included in not successful in isolating the causal thing and asserted that debts under the Fedaseyeu Study largely involve effect of the debt collection laws, but collection are more likely to be the changes to licensing fees, bonds, or instead was picking up other, unrelated, result of high-interest, predatory levels of statutory penalties for factors. lending. violations, rather than prohibiting or The Romeo-Sandler Study uses The Bureau is aware of three requiring specific conduct, and each microdata from two large administrative empirical, academic studies using such change is given the same weight as datasets: The Bureau’s Consumer Credit modern data and methods that estimate a law governing conduct.697 Leaving Panel (CCP) 699 and Credit Card the magnitude of the effect of debt aside the question of whether monetary Database (CCDB).700 This study focuses collection restrictions on access to adjustments under State law are of a on four recent major changes in State or credit,692 one by a researcher affiliated comparable magnitude to the final rule local laws and regulations that imposed with the Federal Reserve Bank of under Federal law, the final rule focuses additional conduct requirements on Philadelphia (Fedaseyeu Study),693 on conduct, rather than State licensing either debt buyers or on all debt another by researchers at the Federal fees, bonds, or penalty amounts. As collectors.701 By focusing on the effect Reserve Bank of New York (Fonseca such, the results of the Fedaseyeu Study of changes to laws that regulate debt Study),694 and a third by researchers at are less informative as to the effects of collector conduct, the results of the the Bureau (Romeo-Sandler Study).695 the final rule than they would be if the Romeo-Sandler Study are arguably more All three empirical studies use changes legal changes at issue were more applicable to understanding effects of in State or local debt collection laws comparable to those in the final rule. the rule, although the specific changes and regulations to examine the effect of The data analysis in the Fedaseyeu to State or local laws studied differ those laws on measures of credit access. Study is also somewhat limited by the considerably from the provisions of the The Fedaseyeu Study used aggregate data that were available. The aggregate rule. data on new credit card accounts data used make it difficult to control for The Romeo-Sandler Study assesses combined with credit union call report confounding factors, such as differences three main outcomes: The probability data to examine the effect of various in credit scores among consumers. that a credit inquiry results in an open State law changes between 1999 and The Fonseca Study follows a similar credit card account, the credit limit on 2012 on the number of new revolving design as the Fedaseyeu Study and newly opened credit card accounts, and lines of credit opened each year in each examines the same set of State law initial interest rates on credit card State. This study finds that an changes, but it employs microdata from accounts. As discussed above, creditors additional restriction on debt collectors the Federal Reserve Bank of New York’s might limit any of these factors to adjust decreases the number of new accounts Consumer Credit Panel, a nationally for the effects of a regulation such as the by about two accounts per quarter per representative sample of credit records final rule. The Romeo-Sandler Study 1000 consumers residing in a State. For from Equifax. The main results of the comparison, the data used for the Fonseca Study focus on the initial loan 699 Although similar in nature, the Bureau’s CCP Fedaseyeu Study showed an average of amounts or limits for automobile loans, is not the same as the Federal Reserve Bank of New 120 new accounts per quarter per 1000 credit cards, and non-traditional finance York’s Consumer Credit Panel, discussed above. The Bureau’s CCP is an anonymized sample of 698 consumers. The Fedaseyeu Study finds loans. The study finds a moderate credit records from one of the three nationwide no effect of debt collection laws on the effect on automobile loan amounts, and CRAs, containing a 1-in-48 representative sample of average credit card interest rate.696 a small effect on initial credit card all adults with a credit record. The data contain all However, the Fedaseyeu Study has limits. Like the Fedaseyeu Study, a credit accounts (trade lines) and hard inquiries on a consumer’s credit report, with a unique, major limitation of the Fonseca Study is anonymous identifier linking records belonging to 692 In addition, earlier empirical research its focus on licensing requirements, the same consumer. This CCP does not contain any examined the relationship between restrictions on which are not directly comparable to the personally identifying information on individual creditor remedies and the supply of credit. See provisions in the rule. That the Fonseca consumers. Thomas A. Durkin et al., Consumer Credit and the 700 The CCDB is a monthly panel describing American Economy 521–525 (Oxford U. Press 2014) Study finds larger effects on automobile balances, payments, and interest rates on all credit (summarizing this empirical literature). loans than credit cards also raises card accounts issued by a set of major banks, 693 Viktar Fedaseyeu, Debt Collection Agencies questions. Although third-party debt representing roughly 90 percent of the credit card and the Supply of Consumer Credit, Journal of collectors are sometimes involved in market. As with the CCP, accounts are identified by Financial Economics, 138 (2020). an anonymous identifier, and the CCDB does not 694 Julia Fonseca et al., Access to Credit and collecting on automobile loans when the contain any personally identifying information. Financial Health: Evaluating the Impact of Debt 701 New laws were put into effect in North Collection (Fed. Reserve Bank of N.Y. Staff Report 697 Specifically, Fedaseyeu created an index of Carolina in October 2009 and California in January No. 814, 2017). debt collection regulation, with one point added for 2014; both of these laws focused exclusively on 695 Charles Romeo & Ryan Sandler, The Effect of a tightening in any one of six categories of debt buyers. In addition, New York City, in April Debt Collection Laws on Access to Credit, Journal regulation, including licensing requirements, 2010, and New York State, in December 2014, of Public Economics, (Forthcoming). bonding requirements, and the creation of a board introduced new debt collection restrictions through 696 In addition to the results described here, the to regulate third-party debt collectors. administrative regulations. These updated Fedaseyeu Study also examines the effect of debt 698 The Fonseca Study defines non-traditional restrictions generally require debt collectors to take collection laws on the number of debt collection finance loans as ‘‘retail cards, personal loans and additional steps before collecting, including firms per capita and a measure of the recovery rate a residual loan category.’’ Like the Fedaseyeu requiring additional documents to substantiate from debt collection. The Bureau omits discussion Study, the Fonseca Study also examines the effect debts before collections can begin, requiring of these results here because they are not directly of the debt collection laws studied on the number disclosures or additional documentation before relevant to the question of consumer access—the of debt collectors present in each State; again, the lawsuits can be filed to enforce a debt, and Bureau discusses potential effects on debt Bureau omits discussion of those results in this requiring disclosures once the State’s statute of collection firms above. section. limitations has run.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00148 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76881

controls for individual consumers’ This is consistent with theory. Even debt collectors are able to pass those credit scores and census tract within the sub-sample of consumers costs on to creditors. The Bureau demographic information and flexibly with sub-prime credit scores, the effect understands that many depository adjusts for State-level trends over time of the laws is equivalent to a three-point institutions and credit unions with $10 that might otherwise bias the estimates decrease in sub-prime borrowers’ credit billion or less in total assets rely on of an analysis. As with the Fedaseyeu scores. FDCPA-covered debt collectors to Study and Fonseca Study, the Romeo- The studies discussed above provide collect debts, but the Bureau does not Sandler Study found effects of debt evidence that regulation of debt have data indicating whether such collection laws that are in the direction collection can affect consumer access to institutions are more or less likely than predicted by theory (i.e., increased credit in ways consistent with economic other creditors to do so. The Bureau did regulation increases the cost or theory. However, these studies do not not receive any comments on this issue decreases the availability of credit), but speak directly to the likely effects of the with respect to the final rule. the effects are quite small in magnitude. final rule on consumer credit markets. 2. Impact of the Rule on Consumers in Using the CCP, this study found that The State or local laws analyzed in Rural Areas additional regulations on debt these studies implement a different set collectors’ conduct caused the success of consumer protections than those in Consumers in rural areas may rate of a credit inquiry to decline by less the final rule. The final rule includes experience benefits from the rule that than 0.02 percentage points off a base some provisions likely to increase debt are different in certain respects from the rate of about 43 percent. The study collector costs, but also includes other benefits experienced by consumers in concludes that one can statistically provisions, such as those related to general. For example, consumers in reject that the effect was as large as 0.7 limited-content messages and email and rural areas may be more likely to borrow percentage points. The study provides text messages, which could lower costs from small local banks and credit some context for these effects by for some debt collectors. In addition, unions that may be less likely to comparing them to the effect of creditors and debt collectors might react outsource debt collection to FDCPA- changing consumers’ credit scores. The differently to changes in State or local covered debt collectors. Debts owed by study found that each credit score point collection standards than the standards consumers in rural areas may also be increases the probability of a successful in the Bureau’s rules, which could affect more likely to be collected by smaller credit inquiry for subprime borrowers all U.S. consumers. For instance, a debt collectors, which the Bureau by about 0.2 percentage points. Thus, nationwide creditor might choose not to understands are less likely to place the estimated effect of a debt collection adjust its credit standards in response to telephone calls to consumers in excess law is equivalent to lowering a change in only one State’s debt of the call frequencies in the final rule. consumers’ credit scores by less than collection laws, but might find it The telephone call frequencies may one point.702 The Romeo-Sandler Study optimal to change its standards if therefore have less of an impact on finds similarly small effects on credit similar laws applied nationwide or to a consumers in rural areas. The Bureau limits, which are again equivalent to a large share of its potential borrowers. requested interested parties to provide very small change in credit score. The The Bureau received several data, research results, and other factual magnitude of the credit limit effect in comments from industry and trade information on how the proposed rule, the Romeo-Sandler Study is smaller association commenters generally if finalized, would affect consumers in than that found in the Fonseca Study. asserting that restrictions on debt rural areas, but the Bureau did not The Romeo-Sandler Study also collection would have negative effects receive any comments on this subject. analyzes the effect of debt collection on access to credit and cited one or VIII. Final Regulatory Flexibility Act laws on credit card interest rates using more of the studies above as support for Analysis the CCDB. The study finds that initial this contention. None of these The Regulatory Flexibility Act (RFA) interest rates increase slightly following commenters addressed the Bureau’s generally requires an agency to conduct a State or local debt collection law or interpretation of the studies as showing an Initial Regulatory Flexibility regulation, but that this entirely takes that past restrictions had a Analysis (IRFA) and a Final Regulatory the form of a reduced frequency of quantitatively small effect on credit Flexibility Analysis (FRFA) of any rule accounts with an introductory APR of 0 access, and none disagreed with the subject to notice-and-comment percent—the level of positive initial Bureau’s observations about the rulemaking requirements.703 Section interest rates are essentially unchanged. limitations of the Fedaseyeu Study and The Romeo-Sandler Study is also able 604(a) of the RFA sets forth the required the Fonseca Study. to shed light on potential areas of elements of the FRFA. Section 604(a)(1) heterogeneity in the effects of State debt I. Potential Specific Impacts of the Rule requires a statement of the need for, and collection laws because of its access to objectives of, the rule.704 Section 1. Depository Institutions and Credit rich microdata. The Romeo-Sandler 604(a)(2) requires a statement of the Unions With $10 Billion or Less in Total Study explores the effects separately for significant issues raised by the public Assets, as Described in Dodd-Frank Act consumers with high and low credit comments in response to the IRFA, a Section 1026 scores and finds somewhat larger statement of the assessment of the (although still small) effects on Depository institutions and credit agency of such issues, and a statement consumers with sub-prime credit scores. unions are generally not debt collectors of any changes made in the proposed under the FDCPA and therefore are rule as a result of such comments. 702 The study notes, as a point of comparison, that generally not covered by the rule. Section 604(a)(3) requires the response this effect is considerably smaller than that of However, as noted above, creditors routine errors in credit reports. See Fed. Trade of the agency to any comments filed by Comm’n, Report to Congress Under Section 319 of could experience indirect effects from the Chief Counsel for Advocacy of the the Fair and Accurate Credit Transactions Act of the rule to the extent they hire FDCPA- Small Business Administration in 2003, at 43 (Dec. 2012), https://www.ftc.gov/sites/ covered debt collectors or sell debt in response to the proposed rule and a default/files/documents/reports/section-319-fair- default to such debt collectors. Such and-accurate-credit-transactions-act-2003-fifth- interim-federal-trade-commission/130211facta creditors could experience higher costs 703 5 U.S.C. 604(a). report.pdf. if debt collectors’ costs increase and if 704 5 U.S.C. 604(a)(1).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00149 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76882 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

detailed statement of any change made respect to the collection of debts by debt transfer requirements that were in the to the proposed rule in the final rule as collectors,’’ as that term is defined in proposals under consideration during a result of the comments. Section the FDCPA.712 Section 1022(a) of the the SBREFA process but that were not 604(a)(4) requires a description of and, Dodd-Frank Act provides that ‘‘[t]he included in the proposed rule.714 While where feasible, an estimate of the Bureau is authorized to exercise its some small entity representatives said number of small entities to which the authorities under Federal consumer that it could be costly to modify their rule will apply.705 Section 604(a)(5) financial law to administer, enforce, and systems to comply with the contact requires a description of the projected otherwise implement the provisions of limits then under consideration, they reporting, recordkeeping, and other Federal consumer financial law.’’ 713 emphasized that those costs could be compliance requirements of the rule, ‘‘Federal consumer financial law’’ high in part because of the need to including an estimate of the classes of includes title X of the Dodd-Frank Act design limits that apply to forms of small entities that will be subject to the and the FDCPA. The legal basis for the communication other than telephone requirement and the types of rule is discussed in detail in the legal calls, such as mail. The frequency limits professional skills necessary for the authority analysis in part IV and in the in the proposed rule were limited to preparation of the report or record.706 section-by-section analysis in part V. telephone calls, as are the telephone call frequency provisions in the final rule. Section 604(a)(6) requires a description B. Significant Issues Raised by the The fact that these provisions apply of any significant alternatives to the rule Public Comments in Response to the only to the placement of telephone calls that accomplish the stated objectives of Initial Regulatory Flexibility Analysis applicable statutes and that minimize and to telephone conversations should any significant economic impact of the The Bureau received comments on the limit the system investments that are rule on small entities.707 Finally, section IRFA from the Acting Chief Counsel for required to track call frequency, because 604(a)(7) requires a description of the Advocacy of the Small Business call frequency is something that many steps the agency has taken to minimize Administration, which are discussed in debt collectors already track in light of any additional cost of credit for small the next section. The Bureau did not the FDCPA’s existing prohibition on entities.708 receive other comments that referenced ‘‘causing a telephone to ring or engaging the IRFA specifically; however, several any person in telephone conversation A. Statement of the Need for, and commenters did raise issues about the repeatedly or continuously with intent Objectives of, the Final Rule burdens of the proposed rule’s to annoy, abuse, or harass any person at The Bureau issues this rule primarily provisions, and the Bureau’s response to the called number.’’ pursuant to its authority under the these issues is discussed in parts V and The SBA letter also notes that the FDCPA and the Dodd-Frank Act.709 The VI above and in this part below. proposed rule could impose costs to read, understand, and train employees objectives of the rule are to answer C. Response to Any Comments Filed by in new practices. The Bureau discussed certain interpretive questions that have the Chief Counsel for Advocacy of the these costs in the IRFA in the context of arisen since the FDCPA’s passage and to Small Business Administration further the FDCPA’s goals of eliminating some specific provisions of the The Acting Chief Counsel for abusive debt collection practices and proposal; the Bureau has added a more Advocacy of the Small Business ensuring that debt collectors who refrain general discussion of these costs in Administration filed a public comment from abusive debt collection practices section E of the FRFA, below. letter on the proposed rule that are not competitively disadvantaged.710 The SBA letter also notes that the discusses both the IRFA and certain of As the first Federal agency with Bureau claims some provisions will the proposed requirements (the ‘‘SBA authority under the FDCPA to prescribe cause no significant impact because letter’’). This section first responds to those provisions are already part of debt substantive rules with respect to the comments on the IRFA and then collectors’ business practices and argues collection of debts by debt collectors, responds to the substantive comments that the Bureau should clarify what the the Bureau issues this rule to clarify on the proposed rule’s provisions. benefit of such provisions is to how debt collectors may appropriately The SBA letter notes that the IRFA consumers if they will not change debt employ newer communication did not estimate the cost to small collector practices. As discussed in part technologies in compliance with the entities of establishing systems to V and the section 1022(b)(2) analysis, FDCPA and to address other comply with the proposed telephone the Bureau believes that, by clarifying communications-related practices that call frequency limits. As discussed the FDCPA’s requirements, the rule will currently pose a risk of harm to below and in the section 1022(b)(2) benefit both consumers and debt consumers, legal uncertainty to analysis, the Bureau does not have collectors, including small entities. industry, or both. The Bureau intends representative data that can be used to Many market participants have that these clarifications will help to reliably measure the one-time costs of identified a need for greater clarity in eliminate abusive debt collection revising systems to comply with the interpreting many of the FDCPA’s practices and ensure that debt collectors telephone frequency provisions, but provisions. For example, an industry who refrain from abusive debt collection does discuss the qualitative information comment letter emphasized that practices are not competitively it has. The SBA letter notes that some ambiguities in the FDCPA lead to disadvantaged.711 small entity representatives said that unnecessary and costly litigation. The As amended by the Dodd-Frank Act, one-time costs to revise systems could Bureau believes that there is a benefit to FDCPA section 814(d) provides that the range from $35,000 to $200,000 and clarifying the FDCPA’s requirements Bureau may ‘‘prescribe rules with argues that these estimates should be even if the vast majority of debt included in the analysis. These 705 5 U.S.C. 604(a)(4). collectors follow practices that meet 706 5 U.S.C. 604(a)(5). estimates refer to costs for system those requirements. The additional 707 5 U.S.C. 604(a)(6). improvements that would have been clarity helps those debt collectors to 708 Id. required to comply with information avoid unnecessary litigation and to have 709 See part IV, supra. 710 See 15 U.S.C. 1692(e). 712 15 U.S.C. 1692l(d). 714 Small Business Review Panel Report, supra 711 See id. 713 12 U.S.C. 5512(a). note 37, at 21.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00150 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76883

confidence in what practices do and do validation notice under section 809(a) of jurisdictions.715 A ‘‘small business’’ is not violate the law. The additional the FDCPA and the requirement to determined by application of SBA clarity also makes it easier to establish respond to consumer disputes under regulations in reference to the North whether less scrupulous debt collectors section 809(b) of the FDCPA. There are, American Industry Classification have violated the statute and to hold of course, burdens associated with other System (NAICS) classifications and size them accountable, which benefits debt information collections that are being standards.716 Under such standards, the collectors who do comply with the law introduced or clarified by the final rule, Small Business Review Panel (Panel) as well as consumers. and those burdens are discussed in this identified four categories of small The SBA letter points out that the FRFA as well as in the supporting entities that may be subject to the proposed rule’s PRA section estimated statement. provisions: Collection agencies (NAICS 1,029,500 burden hours and argues that The SBA letter also expressed several 561440) with $16.5 million or less in this could translate into millions of concerns about specific provisions of annual receipts, debt buyers (NAICS dollars in recordkeeping and reporting the proposed rule and recommended 522298) with $41.5 million or less in costs. Most of this burden is not changes to those provisions. These annual revenues, collection law firms attributable to the rule itself but rather concerns and recommendations, and the (NAICS 541110) with $12.0 million or to the requirements of the FDCPA. As Bureau’s response, are discussed in the less in annual receipts, and servicers discussed in the supporting statement section-by-section analysis of the who acquire accounts in default. These accompanying the Bureau’s information relevant provisions in part V. servicers include depository institutions collection request, the PRA estimates (NAICS 522110, 522120, and 522130) D. Description and, Where Feasible, include the burden not only of with $600 million or less in annual Provision of an Estimate of the Number complying with the new requirements receipts or non-depository institutions of Small Entities to Which the Final introduced by the final rule but also of (NAICS 522390) with $22.0 million or Rule Will Apply complying with the FDCPA itself. These less in annual receipts. The Panel did burdens had not previously been As discussed in the Small Business not meet with small nonprofit accounted for under the PRA. Thus, the Review Panel Report, for the purposes organizations or small government large majority of the estimated burden of assessing the impacts of the rule on jurisdictions.717 hours represent the burden of small entities, ‘‘small entities’’ is The following table provides the complying with FDCPA requirements defined in the RFA to include small Bureau’s estimate of the number and that exist independent of the rule, in businesses, small nonprofit types of entities that may be affected by particular the requirement to provide a organizations, and small government the final rule:

TABLE 4—ESTIMATED NUMBER OF AFFECTED ENTITIES AND SMALL ENTITIES BY CATEGORY

Estimated Estimated number of Category NAICS Small-entity threshold total number of small-entity debt collectors debt collectors within category within category

Collection agencies .... 561440 ...... $16.5 million in annual receipts ...... 9,000 8,800 Debt buyers ...... 522298 ...... $41.5 million in annual receipts ...... 330 300 Collection law firms .... 541110 ...... $12.0 million in annual receipts ...... 1,000 950 Loan servicers ...... 522110, 522120, and 522130 (deposi- $600 million in annual receipts for de- 700 200 tories); 522390 (non-depositories). pository institutions; $22.0 million or less for non-depositories.

Descriptions of the four categories: $16.5 million or less in annual receipts substantial majority of these are small Collection agencies. The Census and are therefore small entities.719 entities.720 Many debt buyers— Bureau defines ‘‘collection agencies’’ Census Bureau estimates indicate that in particularly those that are small (NAICS code 561440) as 2012 there were also more than 5,000 entities—also collect debt on behalf of ‘‘establishments primarily engaged in collection agencies without employees, other debt owners.721 collecting payments for claims and all of which are presumably small Collection law firms. The Bureau remitting payments collected to their entities. clients.’’ 718 In 2012, according to the Debt buyers. Debt buyers purchase estimates that there are 1,000 law firms Census Bureau, there were delinquent accounts and attempt to in the United States that either have as approximately 4,000 collection agencies collect amounts owed, either themselves their principal purpose the collection of with paid employees in the United or through agents. The Bureau estimates consumer debt or regularly collect States. Of these, the Bureau estimates that there are approximately 330 debt consumer debt owed to others, so that that 3,800 collection agencies have buyers in the United States, and that a the rule would apply to them. The

715 5 U.S.C. 601(6). understands that relatively few collection agencies that it has approximately 300 debt buyer members 716 The current SBA size standards are found on collect only commercial debt. and believes that 90 percent of debt buyers are SBA’s website, http://www.sba.gov/content/table- 719 The U.S. Census Bureau estimates average current members. small-business-size-standards. annual receipts of $95,000 per employee for 721 The Bureau understands that debt buyers are collection agencies. Given this, the Bureau assumes 717 Small Business Review Panel Report, supra generally nondepositories that specialize in debt that all firms with fewer than 100 employees and note 37, at 29. approximately one-half of the firms with 100 to 499 buying and, in some cases, debt collection. The 718 As defined by the U.S. Census Bureau, employees are small entities, which implies Bureau understands that debt buyers that are not collection agencies include entities that collect only approximately 3,800 firms. collection agencies would be classified by the commercial debt, and the rule applies only to debt 720 The Receivables Management Association, the Census Bureau under ‘‘all other nondepository collectors of consumer debt. However, the Bureau largest trade group for this industry segment, states credit intermediation’’ (NAICS Code 522298).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00151 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76884 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

Bureau estimates that 95 percent of such for each of these employees, at an other Federal laws as well as State law firms are small entities.722 average cost of $22 per hour, the total statutes and rules. This baseline Loan servicers. Loan servicers would training cost would be approximately represents the status quo from which be covered by the rule if they acquire $2,700,000.726 the impacts of this rule will be servicing of loans already in default.723 evaluated. The Bureau believes that this is most 1. Recordkeeping Requirements The Bureau requested that interested likely to occur with regard to companies Section 1006.100 generally will parties provide data and quantitative that service mortgage loans or student require FDCPA-covered debt collectors analysis of the benefits, costs, or loans. The Bureau estimates that to retain evidence of compliance or impacts of the proposed rule on small approximately 200 such mortgage noncompliance with the FDCPA and entities but did not receive any servicers may be small entities and that Regulation F starting on the date that comments on this subject. few, if any, student loan servicers that the debt collector begins collection The discussion here is limited to the would be covered by the rule are activity on a debt and ending three years direct costs to small entities of small.724 after the debt collector’s last collection complying with the requirements of the final rule. Other impacts, such as the E. Projected Reporting, Recordkeeping, activity on the debt. For recordings of telephone calls, § 1006.100(b) impacts of reduced call frequency on and Other Compliance Requirements of debt collectors’ ability to contact the Rule, Including an Estimate of establishes a different retention period, under which the debt collector must consumers, are discussed at length in Classes of Small Entities That Will Be part VII. The Bureau believes that, Subject to the Requirement and the retain the recordings for three years after the dates of the telephone calls. Thus, except where otherwise noted, the Type of Professional Skills Necessary for impacts discussed in part VII apply to the Preparation of the Report or Record in contrast to other record types, a debt collector could delete a call recording small entities. The final rule will not impose new after three years and yet collection reporting requirements, but it will (a) Prohibited Communications With activity on the relevant account could Consumers impose new recordkeeping and continue after that time. compliance requirements on small The Bureau believes that most debt Section 1006.6(b) generally entities subject to the rule. The collectors are already maintaining implements FDCPA section 805(a)’s requirements and the costs associated records for three or more years for legal prohibition on a debt collector with them are discussed below. In purposes and therefore will not incur communicating with a consumer at addition to the specific costs discussed significant costs as a result of the record unusual or inconvenient times and below, all small entities will incur costs retention requirement. During the places, with a consumer represented by to read the rule and incorporate its SBREFA process, nearly all small entity an attorney, and at a consumer’s place provisions into their policies and representatives stated that their current of employment. This section also procedures, and small entities with practices are already consistent with a expressly prohibits attempts to make employees will need to train employees three-year record retention requirement, such communications, which debt in new policies and procedures. The and some said that they retain records collectors already must avoid given that extent of training required will depend for longer periods ranging from five to a successful attempt would be an FDCPA violation. Section 1006.14(h)(1) on debt collectors’ existing practices ten years.727 Some participants said, interprets FDCPA section 806’s and on the roles performed by however, that they retain some prohibition on a debt collector engaging individual employees. Debt collectors information for a shorter period of time in any conduct the natural consequence employ an estimated 123,000 such as one year. Such small entities 725 of which is to harass, oppress, or abuse workers. If, on average, the rule would incur additional costs for data any person in connection with the required an additional hour of training storage and to update systems to reflect collection of a debt to prohibit debt the longer storage period. 722 The primary trade association for collection collectors from communicating or attorneys, the National Creditors Bar Association 2. Compliance Requirements attempting to communicate with a (NARCA), states that it has approximately 600 law firm members, 95 percent of which are small The rule contains a number of person through a medium of entities. The Bureau estimates that approximately compliance requirements that will communication if the person has 60 percent of law firms that collect debt are NARCA apply to FDCPA-covered debt collectors requested that the debt collector not use members and that a similar fraction of non-member that medium to communicate with the law firms are small entities. who are small entities. The anticipated 723 The Bureau understands that loan servicers costs of compliance for small entities of person. are generally classified under NAICS code 522390, these requirements are discussed below. Debt collectors are already prohibited ‘‘Other Activities Related to Credit Intermediation.’’ In evaluating the potential impacts of from communicating with consumers at Some depository institutions (NAICS codes 522110, a time or place that is known or should 522120, and 522130) also service loans for others the rule on small entities, the Bureau and may be covered by the rule. takes as a baseline conduct in the debt be known to be inconvenient to the 724 Based on the December 2015 Call Report data collection markets under the current consumer. The Bureau therefore expects as compiled by SNL Financial (with respect to legal framework governing debt that debt collectors already keep track of insured depositories) and December 2015 data from collection. This includes debt collector what consumers tell them about the the Nationwide Mortgage Licensing System and times and places that they find Registry (with respect to non-depositories), the practices as they currently exist, Bureau estimates that there are approximately 9,000 responding to the requirements of the inconvenient and avoid communicating small entities engaged in mortgage servicing, of FDCPA as currently interpreted and or attempting to communicate with which approximately 100 service more than 5,000 consumers at those times or places. loans. See 81 FR 72160, 72363 (Oct. 19, 2016). The Bureau’s estimate is based on the assumption that 726 The estimated hourly cost is based on an Similarly, the provisions regarding all those servicing more than 5,000 loans may estimated wage of $15 per hour and taxes, benefits, communication with attorneys and at acquire servicing of loans when loans are in default and incentives of $7 per hour. See CFPB Debt the consumer’s place of employment and that at most 100 of those servicing 5,000 loans Collection Operations Study, supra note 34, at 17 track requirements that debt collectors or fewer acquire servicing of loans when loans are (describing estimated debt collector wages ranging in default. from $10 to $20 per hour). are already required to comply with 725 2020 FDCPA Annual Report, supra note 9, at 727 Small Business Review Panel Report, supra under the FDCPA. The Bureau 7. note 37, at 28. understands that many debt collectors

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00152 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76885

currently employ systems and business understands that larger debt collectors transferee that the debt has been processes designed to limit (including those that are small entities) discharged. The Bureau understands communication attempts to consumers generally already implement system that, if debt collectors transfer such at inconvenient times and places and limits on call frequency to comply with secured debt, they generally already that many debt collectors also use these client contractual requirements, debt provide such notice in the ordinary systems and processes to prevent collector internal policies, and State and course of business. Therefore, the communications with consumers local laws.728 Such debt collectors Bureau does not expect this provision to through media that consumers have told might need only to revise existing create significant compliance costs for them not to use. For these reasons, the calling restrictions to ensure that small entities. Bureau does not expect that the existing systems track telephone calls in (d) Electronic Disclosures and provisions will significantly impact a manner consistent with the new Communications small entities subject to the final rule. provision. Larger collection agencies might also need to respond to client The final rule includes provisions that (b) Telephone Call Frequencies requests for additional reports and audit clarify how debt collectors can Section 1006.14(b)(1) prohibits a debt items to verify that they comply with communicate with consumers by email collector from, in connection with the the provision, which could require these and text message in compliance with collection of a debt, placing telephone agencies to make systems changes to the FDCPA and the final rule. With calls or engaging in telephone alter the reports and data they currently respect to the validation notice, which conversations repeatedly or produce for their clients to review. most debt collectors currently provide continuously with intent to annoy, Smaller debt collectors and collection by mail, § 1006.42 sets forth general abuse, or harass any person at the called law firms are less likely to have existing standards for debt collectors to send number. Section 1006.14(b)(2)(i) systems that track or limit notices electronically in a way that provides for a rebuttable presumption of communication frequency and may complies with the FDCPA’s validation compliance for a debt collector who therefore face larger costs to establish notice requirements. With respect to any places a telephone call to a particular systems to do so. However, many communications about a debt, person in connection with the collection smaller debt collectors report that they § 1006.6(d)(3) through (5) specifies of a particular debt neither: (A) More generally attempt to reach each procedures that debt collectors may use than seven times within seven- consumer by telephone only one or two to send an email or text message to a consecutive-days; nor (B) within a times per week and generally do not consumer about a debt such that the period of seven-consecutive-days after speak to a consumer more than one time debt collector may obtain a safe harbor having had a telephone conversation per week, which suggests that their from civil liability under the FDCPA for with the person in connection with the practices would afford them a an unintentional disclosure of the debt collection of such debt, subject to the presumption of compliance with respect to a third party. exclusions in § 1006.14(b)(3). Section to telephone call frequencies under the The Bureau understands that few debt 1006.14(b)(2)(ii) sets forth a rebuttable final rule.729 For such debt collectors, collectors currently communicate with presumption of a violation for a debt existing policies may be sufficient to consumers using electronic means. For collector who places a telephone call to ensure compliance with the provision, debt collectors who do communicate a particular person in connection with although they may incur one-time costs with consumers electronically, the rule the collection of a particular debt: (A) to establish systems for documenting requires them to provide a method for More than seven times within seven- compliance. opting out of such communications. The consecutive-days; or (B) within a period Bureau understands that such methods of seven-consecutive-days after having (c) Prohibition on the Sale or Transfer are common features of services that had a telephone conversation with the of Certain Debts provide the ability to send electronic person in connection with the collection Section 1006.30(b)(1) prohibits a debt communications to consumers. The of such debt. collector from selling, transferring for Bureau therefore does not anticipate The provision imposes at least two consideration, or placing for collection that these requirements will impose categories of costs on small entities a debt if the debt collector knows or significant costs on small entities that subject to the final rule. First, it means should know that the debt was paid or choose to communicate with consumers that debt collectors must track the settled or discharged in bankruptcy. electronically. frequency of outbound telephone calls, Section 1006.30(b)(2) creates several which will require many debt collectors F. Description of Any Significant exceptions to this prohibition. Alternatives to the Final Rule That to bear one-time costs to update their The Bureau understands, based on its systems and train staff, and which will Accomplish the Stated Objectives of the market knowledge and outreach to debt Applicable Statutes and Minimize Any create ongoing costs for some debt collectors, that debt collectors generally collectors. Second, for some debt Significant Economic Impact of the Rule do not sell, transfer, or place for on Small Entities collectors, the provision will require a collection debts (other than in reduction in the frequency with which circumstances covered in the Section 604(a)(6) of the RFA requires they place telephone calls to consumers, exceptions) if they have reason to the Bureau to describe in the FRFA any which could make it harder to reach believe the debts cannot be validly significant alternatives to the rule that consumers and delay or reduce collected because they have been paid accomplish the stated objectives of collections revenue. or settled or discharged in bankruptcy. applicable statutes and that minimize With respect to one-time The final rule provides an exception for any significant economic impact of the 730 implementation costs, many debt transfer of secured debt that has been rule on small entities. In developing collectors will incur costs to revise their discharged in bankruptcy, provided that the rule, the Bureau has considered systems to track telephone call the debt collector provides notice to the alternative provisions and believes that frequencies. Such revisions could range none of the alternatives considered from small updates to existing systems 728 Id. at 26. would be as effective at accomplishing to the introduction of completely new 729 CFPB Debt Collection Operations Study, supra systems and processes. The Bureau note 34, at 29. 730 5 U.S.C. 604(a)(6).

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00153 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76886 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

the stated objectives of the FDCPA and (4), and (5) described telephone calls representatives to comment on how the applicable provisions of title X of excluded from the frequency limits, the proposed provisions will affect cost of the Dodd-Frank Act while minimizing effect of complying with the frequency credit to small entities. The Bureau the impact of the rule on small entities. limits, and a definition, respectively. believes that the rule will have little In developing the rule, the Bureau The proposed rule’s bright-line limit impact on the cost of credit. However, considered a number of alternatives, would impose lower costs on debt it does recognize that consumer credit including those considered as part of collectors than the final rule in some may become more expensive and less the SBREFA process and certain ways, although it would impose greater available as a result of some of these alternative provisions that were part of costs in other ways. Specifically, a provisions, although the Romeo-Sandler the proposal. Many of the alternatives bright-line limit on telephone call Study indicates that the magnitude of considered would have resulted in frequency would provide greater clarity the cost and availability of consumer greater costs to small entities than to debt collectors about whether calling credit from recent changes to State debt would the rule. For example, the Bureau practices comply with the FDCPA. For collection laws is small. Many small considered limiting the frequency of example, under the proposal, a debt entities affected by the rule use contacts or contact attempts by any collector who did not place telephone consumer credit as a source of credit media, rather than by telephone calls calls to consumers more than seven and may, therefore, see costs rise if only. Because such alternatives would times in a seven-day period would consumer credit availability decreases. result in a greater economic impact on know that it was complying with the The Bureau does not expect this to be small entities than the rule, they are not provision, whereas, under the final rule, a large effect and does not anticipate discussed here. The Bureau also a debt collector following the same measurable impact.732 considered alternatives that might have practice would also need to consider During the SBREFA process, several resulted in a smaller economic impact whether the presumption of compliance small entity representatives said that the on small entities than the rule. Certain might be rebutted in the case of proposals under consideration at that of these alternatives are briefly particular consumers or accounts. This time could have an impact on the cost described and their impacts relative to could result in greater compliance costs of credit for them and for their small the rule provisions are discussed below. and greater risk of litigation for debt business clients. Some small entity Limitations on call frequency. The collectors compared with the proposal. representatives said that they use lines Bureau considered a proposal that On the other hand, the final rule may of credit in their business and that would have limited the number of calls provide greater flexibility to debt regulations that raise their costs or permitted to any particular telephone collectors and additional benefits to reduce their revenue could mean they number (e.g., at most two calls to each consumers compared with the proposal. are unable to meet covenants in their of a consumer’s landline, mobile, and For debt collectors, the final rule may loan agreements, causing lenders to work telephone numbers). The Bureau make it more possible to reach reduce access to capital or increase their considered such a limit either instead of consumers if they are unable to make borrowing costs. The final rule’s or in addition to an overall limit on the contact within seven call attempts in a provisions are more limited than those frequency of telephone calls to one week and additional calls would not be that were under consideration during consumer. Such an alternative could harassing. the SBREFA process and should not potentially reduce the effect on debt raise costs or reduce revenue to the collector calls if it permitted more calls G. Discussion of Impact on Cost of same degree. The Bureau did not receive when consumers have multiple Credit for Small Entities public comments on the effect of the telephone numbers. The Bureau decided Section 604(a)(6) of the RFA requires proposed rule on the cost of credit for to propose an aggregate approach the Bureau to a description of the steps small entities. because of concerns that a more the agency has taken to minimize any prescriptive, per-telephone number additional cost of credit for small IX. Paperwork Reduction Act approach could less effectively carry out entities.731 The Bureau provided Under the Paperwork Reduction Act the consumer protection purposes of the notification to the Chief Counsel for of 1995 (PRA),733 Federal agencies are FDCPA—some consumers could receive Advocacy of the Small Business generally required to seek approval from (and some debt collectors could place) Administration (Chief Counsel) that the the Office of Management and Budget more telephone calls simply based on Bureau would collect the advice and (OMB) for information collection the number of telephone numbers that recommendations of the same small requirements prior to implementation. certain consumers happened to have entity representatives identified in Under the PRA, the Bureau may not (and that debt collectors happened to consultation with the Chief Counsel conduct or sponsor, and, know about). Such an approach also through the SBREFA process concerning notwithstanding any other provision of could create incentives for debt any projected impact and the rule on the law, a person is not required to respond collectors to, for example, place cost of credit for small entities. The to, an information collection unless the telephone calls to less convenient Bureau sought to collect the advice and information collection displays a valid telephone numbers after exhausting recommendations of the small entity control number assigned by OMB. their telephone calls to consumers’ representatives during the Small As part of its continuing effort to preferred numbers. Business Review Panel meeting reduce paperwork and respondent The proposed rule would have regarding the potential impact on the burden, the Bureau conducts a established a bright-line limit on cost of business credit because, as small preclearance consultation program to telephone call frequency rather than a debt collectors with credit needs, the provide the general public and Federal rebuttable presumption. Specifically, small entity representatives could agencies with an opportunity to proposed § 1006.14(b)(1) set forth the provide valuable input on any such comment on the information collection general prohibition, § 1006.14(b)(2) impact related to the rule. described bright-line frequency limits The Bureau’s Small Business Review 732 Charles Romeo & Ryan Sandler, The Effect of Debt Collection Laws on Access to Credit (Off. of for telephone calls and telephone Panel Outline asked small entity Research, Bureau of Consumer Fin. Prot., Working conversations during a seven-day Paper No. 2018–01, 2018). period, and proposed § 1006.14(b)(3), 731 Id. 733 44 U.S.C. 3501 et seq.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00154 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76887

requirements in accordance with the will publish a separate notice in the document to Laura Galban, a Bureau PRA. This helps ensure that the public Federal Register when these Federal Register Liaison, for purposes of understands the Bureau’s requirements information collections have been publication in the Federal Register. or instructions, respondents can provide approved by OMB. List of Subjects in 12 CFR Part 1006 the requested data in the desired format, Please send your comments to the reporting burden (time and financial Office of Information and Regulatory Administrative practice and resources) is minimized, collection Affairs, OMB, Attention: Desk Officer procedure, Consumer protection, Credit, instruments are clearly understood, and for the Bureau of Consumer Financial Debt collection, Intergovernmental the Bureau can properly assess the Protection. Send these comments by relations. _ impact of collection requirements on email to oira [email protected] Authority and Issuance respondents. or by fax to 202–395–6974. If you wish The final rule amends 12 CFR part to share your comments with the ■ For the reasons set forth above, the 1006 (Regulation F), which implements Bureau, please send a copy of these Bureau revises Regulation F, 12 CFR the FDCPA. The Bureau’s OMB control comments as described in the Addresses part 1006, to read as follows: number for Regulation F is 3170–0056. section above. The ICR submitted to PART 1006—DEBT COLLECTION This rule revises the information OMB requesting approval under the PRACTICES (REGULATION F) collection requirements contained in PRA for the information collection Regulation F that OMB has approved requirements contained herein is Subpart A—General under that OMB control number. available at www.regulations.gov as well Sec. Under the final rule, the Bureau as on OMB’s public-facing docket at 1006.1 Authority, purpose, and coverage. requires six information collection www.reginfo.gov. 1006.2 Definitions. requirements in Regulation F: Title of Collection: Regulation F: Fair 1. State application for exemption Subpart B—Rules for FDCPA Debt Debt Collection Practices Act. Collectors (current § 1006.2, final rule § 1006.108). OMB Control Number: 3170–0056. 2. Opt-out notice for electronic Type of Review: Revision of a 1006.6 Communications in connection with communications or attempts to currently approved collection. debt collection. communicate (final rule § 1006.6(e)). 1006.10 Acquisition of location Affected Public: Private Sector; State information. 3. Providing notice to transferee that Governments. 1006.14 Harassing, oppressive, or abusive secured debt was discharged in Estimated Number of Respondents: conduct. bankruptcy (final rule 12,027. 1006.18 False, deceptive, or misleading § 1006.30(b)(2)(ii)). Estimated Total Annual Burden representations or means. 4. Responses to requests for original- Hours: 860,500. 1006.22 Unfair or unconscionable means. creditor information (final rule The Bureau has a continuing interest 1006.26 [Reserved] § 1006.38(c)). in the public’s opinion of its collections 1006.30 Other prohibited practices. 5. Responses to disputes (final rule of information. At any time, comments 1006.34 [Reserved] 1006.38 Disputes and requests for original- § 1006.38(d)(2)). regarding the burden estimate, or any 6. Record retention (final rule creditor information. other aspect of the information 1006.42 Sending required disclosures. § 1006.100). collection, including suggestions for The first collection, the State reducing the burden, may be sent to the Subpart C—[Reserved] application for an exemption, is Consumer Financial Protection Bureau Subpart D—Miscellaneous required to obtain a benefit and its (Attention: PRA Office), 1700 G Street 1006.100 Record retention. respondents are exclusively State NW, Washington, DC 20552, or by email 1006.104 Relation to State laws. governments. The information collected to CFPB [email protected]. 1006.108 Exemption for State regulation. under this collection regards State law, Where applicable, the Bureau will Appendix A to Part 1006—Procedures for and so no issue of confidentiality arises. display the control number assigned by State Application for Exemption From The remaining collections provide OMB to any documents associated with the Provisions of the Act protection for consumers and will be Appendix B to Part 1006—[Reserved] any information collection requirements Appendix C to Part 1006—Issuance of mandatory. Because the Bureau does not adopted in this rule. collect any information in these Advisory Opinions X. Congressional Review Act Supplement I to Part 1006—Official remaining collections, no issue of Interpretations confidentiality arises. The likely Pursuant to the Congressional Review Authority: 12 U.S.C. 5512, 5514(b), 5532; respondents are for-profit businesses 734 Act, the Bureau will submit a report 15 U.S.C. 1692l(d), 1692o, 7004. that are FDCPA-covered debt collectors, containing this rule and other required including contingency debt collection information to the U.S. Senate, the U.S. Subpart A—General agencies, debt buyers, law firms, and House of Representatives, and the loan servicers, or State governments in Comptroller General of the United § 1006.1 Authority, purpose, and coverage. the case of applications under § 1006.2 States at least 60 days prior to the rule’s (a) Authority. This part, known as (final § 1006.108). published effective date. The Office of Regulation F, is issued by the Bureau of The collections of information Information and Regulatory Affairs has Consumer Financial Protection pursuant contained in this rule, and identified as designated this rule as a ‘‘major rule’’ as to sections 814(d) and 817 of the Fair such, have been submitted to OMB for defined by 5 U.S.C. 804(2). Debt Collection Practices Act (FDCPA or review under section 3507(d) of the Act), 15 U.S.C. 1692l(d), 1692o; title X PRA. A complete description of the XI. Signing Authority of the Dodd-Frank Wall Street Reform information collection requirements, The Director of the Bureau, Kathleen and Consumer Protection Act (Dodd- including the burden estimate methods, L. Kraninger, having reviewed and Frank Act), 12 U.S.C. 5481 et seq.; and is provided in the information approved this document, is delegating paragraph (b)(1) of section 104 of the collection request (ICR) that the Bureau the authority to electronically sign this Electronic Signatures in Global and has submitted to OMB under the National Commerce Act (E–SIGN Act), requirements of the PRA. The Bureau 734 5 U.S.C. 801 et seq. 15 U.S.C. 7004.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00155 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76888 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

(b) Purpose. This part carries out the (g) Creditor means any person who consumers and distributing such purposes of the FDCPA, which include offers or extends credit creating a debt amounts to creditors; eliminating abusive debt collection or to whom a debt is owed. The term (vi) Any person collecting or practices by debt collectors, ensuring creditor does not, however, include any attempting to collect any debt owed or that debt collectors who refrain from person to the extent that such person due, or asserted to be owed or due to using abusive debt collection practices receives an assignment or transfer of a another, to the extent such debt are not competitively disadvantaged, debt in default solely to facilitate collection activity: and promoting consistent State action to collection of the debt for another. (A) Is incidental to a bona fide protect consumers against debt (h) Debt means any obligation or fiduciary obligation or a bona fide collection abuses. This part also alleged obligation of a consumer to pay escrow arrangement; prescribes requirements to ensure that money arising out of a transaction in (B) Concerns a debt that such person certain features of debt collection are which the money, property, insurance, originated; disclosed fully, accurately, and or services that are the subject of the (C) Concerns a debt that was not in effectively to consumers in a manner transaction are primarily for personal, default at the time such person obtained that permits consumers to understand family, or household purposes, whether it; or the costs, benefits, and risks associated or not the obligation has been reduced (D) Concerns a debt that such person with debt collection, in light of the facts to judgment. obtained as a secured party in a and circumstances. Finally, this part (i)(1) Debt collector means any person commercial credit transaction involving imposes record retention requirements who uses any instrumentality of the creditor; and to enable the Bureau to administer and interstate commerce or mail in any (vii) A private entity, to the extent carry out the purposes of the FDCPA, business the principal purpose of which such private entity is operating a bad the Dodd-Frank Act, and this part, as is the collection of debts, or who check enforcement program that well as to prevent evasions thereof. The regularly collects or attempts to collect, complies with section 818 of the Act. record retention requirements also will directly or indirectly, debts owed or (j) Limited-content message means a facilitate supervision of debt collectors due, or asserted to be owed or due, to voicemail message for a consumer that and the assessment and detection of another. Notwithstanding paragraph includes all of the content described in risks to consumers. (i)(2)(vi) of this section, the term debt paragraph (j)(1) of this section, that may (c) Coverage. (1) Except as provided in collector includes any creditor that, in include any of the content described in § 1006.108 and appendix A of this part the process of collecting its own debts, paragraph (j)(2) of this section, and that regarding applications for State uses any name other than its own that includes no other content. exemptions from the FDCPA, this part would indicate that a third person is (1) Required content. A limited- applies to debt collectors, as defined in collecting or attempting to collect such content message is a voicemail message § 1006.2(i), other than a person debts. For purposes of § 1006.22(e), the for a consumer that includes: excluded from coverage by section term also includes any person who uses (i) A business name for the debt 1029(a) of the Consumer Financial any instrumentality of interstate collector that does not indicate that the Protection Act of 2010, title X of the commerce or mail in any business the debt collector is in the debt collection Dodd-Frank Act (12 U.S.C. 5519(a)). principal purpose of which is the business; (ii) A request that the consumer reply (2) [Reserved] enforcement of security interests. to the message; (2) The term debt collector excludes: § 1006.2 Definitions. (iii) The name or names of one or (i) Any officer or employee of a For purposes of this part, the more natural persons whom the creditor while the officer or employee is following definitions apply: consumer can contact to reply to the (a) Act or FDCPA means the Fair Debt collecting debts for the creditor in the debt collector; and Collection Practices Act (15 U.S.C. 1692 creditor’s name; (iv) A telephone number or numbers et seq.). (ii) Any person while acting as a debt that the consumer can use to reply to (b) Attempt to communicate means collector for another person if: the debt collector. any act to initiate a communication or (A) The person acting as a debt (2) Optional content. In addition to other contact about a debt with any collector does so only for persons with the content described in paragraph (j)(1) person through any medium, including whom the person acting as a debt of this section, a limited-content by soliciting a response from such collector is related by common message may include one or more of the person. An attempt to communicate ownership or affiliated by corporate following: includes leaving a limited-content control; and (i) A salutation; message, as defined in paragraph (j) of (B) The principal business of the (ii) The date and time of the message; this section. person acting as a debt collector is not (iii) Suggested dates and times for the (c) Bureau means the Bureau of the collection of debts; consumer to reply to the message; and Consumer Financial Protection. (iii) Any officer or employee of the (iv) A statement that if the consumer (d) Communicate or communication United States or any State to the extent replies, the consumer may speak to any means the conveying of information that collecting or attempting to collect of the company’s representatives or regarding a debt directly or indirectly to any debt is in the performance of the associates. any person through any medium. officer’s or employee’s official duties; (k) Person includes natural persons, (e) Consumer means any natural (iv) Any person while serving or corporations, companies, associations, person obligated or allegedly obligated attempting to serve legal process on any firms, partnerships, societies, and joint to pay any debt. For purposes of other person in connection with the stock companies. § 1006.6, the term consumer includes judicial enforcement of any debt; (l) State means any State, territory, or the persons described in § 1006.6(a). (v) Any nonprofit organization that, at possession of the United States, the The Bureau may further define this term the request of consumers, performs bona District of Columbia, the by regulation to clarify its application fide consumer credit counseling and Commonwealth of Puerto Rico, or any when the consumer is deceased. assists consumers in liquidating their political subdivision of any of the (f) [Reserved] debts by receiving payment from such foregoing.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00156 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76889

Subpart B—Rules for FDCPA Debt (4) Exceptions. The prohibitions in (iii) With the express permission of a Collectors paragraphs (b)(1) through (3) of this court of competent jurisdiction; or section do not apply when a debt (iv) As reasonably necessary to § 1006.6 Communications in connection collector communicates or attempts to effectuate a postjudgment judicial with debt collection. communicate with a consumer in remedy. (a) Definition. For purposes of this connection with the collection of any (3) Reasonable procedures for email section, the term consumer includes: debt with: and text message communications. A (1) The consumer’s spouse; (i) The prior consent of the consumer, debt collector maintains procedures that (2) The consumer’s parent, if the given directly to the debt collector are reasonably adapted, for purposes of consumer is a minor; during a communication that does not FDCPA section 813(c), to avoid a bona (3) The consumer’s legal guardian; violate paragraphs (b)(1) through (3) of (4) The executor or administrator of fide error in sending an email or text this section; or the consumer’s estate, if the consumer is message communication that would (ii) The express permission of a court result in a violation of paragraph (d)(1) deceased; and of competent jurisdiction. (5) A confirmed successor in interest, of this section if those procedures (c) Communications with a include steps to reasonably confirm and as defined in Regulation X, 12 CFR consumer—after refusal to pay or cease 1024.31, or Regulation Z, 12 CFR document that: communication notice—(1) Prohibition. (i) The debt collector communicated 1026.2(a)(27)(ii). Except as provided in paragraph (c)(2) (b) Communications with a with the consumer by sending an email of this section, if a consumer notifies a consumer—(1) Prohibitions regarding to an email address described in debt collector in writing that the unusual or inconvenient times or paragraph (d)(4) of this section or a text consumer refuses to pay a debt or that places. Except as provided in paragraph message to a telephone number the consumer wants the debt collector to (b)(4) of this section, a debt collector described in paragraph (d)(5) of this cease further communication with the must not communicate or attempt to section; and consumer, the debt collector must not communicate with a consumer in (ii) The debt collector did not communicate or attempt to connection with the collection of any communicate with the consumer by communicate further with the consumer debt: sending an email to an email address or (i) At any unusual time, or at a time with respect to such debt. (2) Exceptions. The prohibition in a text message to a telephone number that the debt collector knows or should paragraph (c)(1) of this section does not that the debt collector knows has led to know is inconvenient to the consumer. apply when a debt collector a disclosure prohibited by paragraph In the absence of the debt collector’s communicates or attempts to (d)(1) of this section. knowledge of circumstances to the communicate further with a consumer (4) Procedures for email addresses. contrary, a time before 8:00 a.m. and with respect to such debt: For purposes of paragraph (d)(3)(i) of after 9:00 p.m. local time at the (i) To advise the consumer that the this section, a debt collector may send consumer’s location is inconvenient; or debt collector’s further efforts are being an email to an email address if: (ii) At any unusual place, or at a place terminated; (i) Procedures based on that the debt collector knows or should (ii) To notify the consumer that the communication between the consumer know is inconvenient to the consumer. debt collector or creditor may invoke and the debt collector. (A) The (2) Prohibitions regarding consumer specified remedies that the debt consumer used the email address to represented by an attorney. Except as collector or creditor ordinarily invokes; communicate with the debt collector provided in paragraph (b)(4) of this or about the debt and the consumer has not section, a debt collector must not (iii) Where applicable, to notify the since opted out of communications to communicate or attempt to consumer that the debt collector or that email address; or communicate with a consumer in creditor intends to invoke a specified (B) The debt collector has received connection with the collection of any remedy. directly from the consumer prior debt if the debt collector knows the (d) Communications with third consent to use the email address to consumer is represented by an attorney parties—(1) Prohibitions. Except as communicate with the consumer about with respect to such debt and knows, or provided in paragraph (d)(2) of this the debt and the consumer has not can readily ascertain, the attorney’s section, a debt collector must not withdrawn that consent; or name and address, unless the attorney: communicate, in connection with the (ii) Procedures based on (i) Fails to respond within a collection of any debt, with any person reasonable period of time to a communication by the creditor. (A) A other than: creditor obtained the email address from communication from the debt collector; (i) The consumer; or the consumer; (ii) The consumer’s attorney; (B) The creditor used the email (ii) Consents to the debt collector’s (iii) A consumer reporting agency, if address to communicate with the direct communication with the otherwise permitted by law; consumer. (iv) The creditor; consumer about the account and the (3) Prohibitions regarding consumer’s (v) The creditor’s attorney; or consumer did not ask the creditor to place of employment. Except as (vi) The debt collector’s attorney. stop using it; provided in paragraph (b)(4) of this (2) Exceptions. The prohibition in (C) Before the debt collector used the section, a debt collector must not paragraph (d)(1) of this section does not email address to communicate with the communicate or attempt to apply when a debt collector consumer about the debt, the creditor communicate with a consumer in communicates, in connection with the sent the consumer a written or connection with the collection of any collection of any debt, with a person: electronic notice, to an address the debt at the consumer’s place of (i) For the purpose of acquiring creditor obtained from the consumer employment, if the debt collector knows location information, as provided in and used to communicate with the or has reason to know that the § 1006.10; consumer about the account, that clearly consumer’s employer prohibits the (ii) With the prior consent of the and conspicuously disclosed: consumer from receiving such consumer given directly to the debt (1) That the debt has been or will be communication. collector; transferred to the debt collector;

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00157 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76890 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

(2) The email address and the fact that and within the past 60 days the debt communication relates to the collection the debt collector might use the email collector either: of a debt; and address to communicate with the (A) Obtained the prior consent (5) After the debt collector knows the consumer about the debt; described in paragraph (d)(5)(ii) of this consumer is represented by an attorney (3) That, if others have access to the section or renewed consent from the with regard to the subject debt and has email address, then it is possible they consumer; or knowledge of, or can readily ascertain, may see the emails; (B) Confirmed, using a complete and such attorney’s name and address, not (4) Instructions for a reasonable and accurate database, that the telephone communicate with any person other simple method by which the consumer number has not been reassigned from than that attorney, unless the attorney could opt out of such communications; the consumer to another user since the fails to respond to the debt collector’s and date of the consumer’s most recent communication within a reasonable (5) The date by which the debt consent to use that telephone number to period of time. collector or the creditor must receive the communicate about the debt by text (c) Frequency of location consumer’s request to opt out, which message. communications. In addition to must be at least 35 days after the date (e) Opt-out notice for electronic complying with § 1006.14(b)(1), a debt the notice is sent; communications or attempts to collector communicating with any (D) The opt-out period provided communicate. A debt collector who person other than the consumer for the under paragraph (d)(4)(ii)(C)(5) of this communicates or attempts to purpose of acquiring location section has expired and the consumer communicate with a consumer information about the consumer must has not opted out; and electronically in connection with the not communicate more than once with (E) The email address has a domain collection of a debt using a specific such person unless requested to do so name that is available for use by the email address, telephone number for by such person, or unless the debt general public, unless the debt collector text messages, or other electronic- collector reasonably believes that the knows the address is provided by the medium address must include in such earlier response of such person is consumer’s employer. communication or attempt to erroneous or incomplete and that such (iii) Procedures based on communicate a clear and conspicuous person now has correct or complete communication by the prior debt statement describing a reasonable and location information. collector. (A) Any prior debt collector simple method by which the consumer § 1006.14 Harassing, oppressive, or obtained the email address in can opt out of further electronic abusive conduct. accordance with paragraph (d)(4)(i) or communications or attempts to (a) In general. A debt collector must (ii) of this section; communicate by the debt collector to not engage in any conduct the natural (B) The immediately prior debt that address or telephone number. The consequence of which is to harass, collector used the email address to debt collector may not require, directly oppress, or abuse any person in communicate with the consumer about or indirectly, that the consumer, in connection with the collection of a debt, the debt; and order to opt out, pay any fee to the debt including, but not limited to, the (C) The consumer did not opt out of collector or provide any information conduct described in paragraphs (b) such communications. other than the consumer’s opt-out through (h) of this section. (5) Procedures for telephone numbers preferences and the email address, (b) Repeated or continuous telephone for text messages. For purposes of telephone number for text messages, or calls or telephone conversations—(1) In paragraph (d)(3)(i) of this section, a debt other electronic-medium address subject general. In connection with the collector may send a text message to a to the opt-out request. collection of a debt, a debt collector telephone number if: must not place telephone calls or engage (i) The consumer used the telephone § 1006.10 Acquisition of location information. any person in telephone conversation number to communicate with the debt repeatedly or continuously with intent (a) Definition. The term location collector about the debt by text message, to annoy, abuse, or harass any person at information means a consumer’s: the consumer has not since opted out of the called number. text message communications to that (1) Place of abode and telephone (2) Telephone call frequencies; telephone number, and within the past number at such place; or presumptions of compliance and 60 days either: (2) Place of employment. violation. (i) Subject to the exclusions in (A) The consumer sent the text (b) Form and content of location paragraph (b)(3) of this section, a debt message described in paragraph (d)(5)(i) communications. A debt collector collector is presumed to comply with of this section or a new text message to communicating with a person other paragraph (b)(1) of this section and the debt collector from that telephone than the consumer for the purpose of FDCPA section 806(5) (15 U.S.C. number; or acquiring location information must: 1692d(5)) if the debt collector places a (B) The debt collector confirmed, (1) Identify himself or herself telephone call to a particular person in using a complete and accurate database, individually by name, state that he or connection with the collection of a that the telephone number has not been she is confirming or correcting the particular debt neither: reassigned from the consumer to consumer’s location information, and, (A) More than seven times within another user since the date of the only if expressly requested, identify his seven consecutive days; nor consumer’s most recent text message to or her employer; (B) Within a period of seven the debt collector from that telephone (2) Not state that the consumer owes consecutive days after having had a number; or any debt; telephone conversation with the person (ii) The debt collector received (3) Not communicate by postcard; in connection with the collection of directly from the consumer prior (4) Not use any language or symbol on such debt. The date of the telephone consent to use the telephone number to any envelope or in the contents of any conversation is the first day of the communicate with the consumer about communication by mail indicating that seven-consecutive-day period. the debt by text message, the consumer the debt collector is in the debt (ii) Subject to the exclusions in has not since withdrawn that consent, collection business or that the paragraph (b)(3) of this section, a debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00158 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76891

collector is presumed to violate disclosing the caller’s identity, except as (v) A sale, referral, or other transfer of paragraph (b)(1) of this section and provided in § 1006.10. any interest in a debt causes or will FDCPA section 806(5) if the debt (h) Prohibited communication cause the consumer to: collector places a telephone call to a media—(1) In general. In connection (A) Lose any claim or defense to particular person in connection with the with the collection of any debt, a debt payment of the debt; or collection of a particular debt in excess collector must not communicate or (B) Become subject to any practice of either of the telephone call attempt to communicate with a person prohibited by this part. frequencies described in paragraph through a medium of communication if (vi) Accounts have been turned over (b)(2)(i) of this section. the person has requested that the debt to innocent purchasers for value. (3) Certain telephone calls excluded collector not use that medium to (vii) Documents are legal process. from the telephone call frequencies. communicate with the person. (viii) Documents are not legal process Telephone calls placed to a person do (2) Exceptions. Notwithstanding the forms or do not require action by the not count toward the telephone call prohibition in paragraph (h)(1) of this consumer. frequencies described in paragraph section: (2) A debt collector must not falsely (b)(2)(i) of this section if they are: (i) If a person opts out of receiving represent: (i) The character, amount, or legal (i) Placed with such person’s prior electronic communications from a debt status of any debt. consent given directly to the debt collector, a debt collector may send an (ii) Any services rendered, or collector and within a period no longer electronic confirmation of the person’s compensation that may be lawfully than seven consecutive days after request to opt out, provided that the received, by any debt collector for the receiving the prior consent, with the electronic confirmation contains no date the debt collector receives prior collection of a debt. information other than a statement (3) A debt collector must not consent counting as the first day of the confirming the person’s request and that represent or imply that nonpayment of seven-consecutive-day period; the debt collector will honor it; any debt will result in the arrest or (ii) Not connected to the dialed (ii) If a person initiates contact with imprisonment of any person or the number; or a debt collector using a medium of seizure, garnishment, attachment, or (iii) Placed to the persons described in communication that the person sale of any property or wages of any § 1006.6(d)(1)(ii) through (vi). previously requested the debt collector person unless such action is lawful and (4) Definition. For purposes of this not use, the debt collector may respond the debt collector or creditor intends to paragraph (b), particular debt means once through the same medium of take such action. each of a consumer’s debts in collection. communication used by the person; or (c) False, deceptive, or misleading However, in the case of student loan (iii) If otherwise required by collection means. A debt collector must debts, the term particular debt means all applicable law, a debt collector may not: student loan debts that a consumer owes communicate or attempt to (1) Threaten to take any action that or allegedly owes that were serviced communicate with a person in cannot legally be taken or that is not under a single account number at the connection with the collection of any intended to be taken. time the debts were obtained by a debt debt through a medium of (2) Communicate or threaten to collector. communication that the person has communicate to any person credit (c) Violence or other criminal means. requested the debt collector not use to information that the debt collector In connection with the collection of a communicate with the person. knows or should know is false, debt, a debt collector must not use or including the failure to communicate threaten to use violence or other § 1006.18 False, deceptive, or misleading representations or means. that a disputed debt is disputed. criminal means to harm the physical (3) Use or distribute any written person, reputation, or property of any (a) In general. A debt collector must communication that simulates or that person. not use any false, deceptive, or the debt collector falsely represents to (d) Obscene or profane language. In misleading representation or means in be a document authorized, issued, or connection with the collection of a debt, connection with the collection of any approved by any court, official, or a debt collector must not use obscene or debt, including, but not limited to, the agency of the United States or any State, profane language, or language the conduct described in paragraphs (b) or that creates a false impression about natural consequence of which is to through (d) of this section. its source, authorization, or approval. abuse the hearer or reader. (b) False, deceptive, or misleading (4) Use any business, company, or (e) Debtor’s list. In connection with representations. (1) A debt collector organization name other than the true the collection of a debt, a debt collector must not falsely represent or imply that: name of the debt collector’s business, must not publish a list of consumers (i) The debt collector is vouched for, company, or organization. who allegedly refuse to pay debts, bonded by, or affiliated with the United (d) False representations or deceptive except to a consumer reporting agency States or any State, including through means. A debt collector must not use or to persons meeting the requirements the use of any badge, uniform, or any false representation or deceptive of sections 603(f) or 604(a)(3) of the Fair facsimile thereof. means to collect or attempt to collect Credit Reporting Act (15 U.S.C. 1681a(f) (ii) The debt collector operates or is any debt or to obtain information or 1681b(a)(3)). employed by a consumer reporting concerning a consumer. (f) Coercive advertisements. In agency, as defined by section 603(f) of (e) Disclosures required—(1) Initial connection with the collection of a debt, the Fair Credit Reporting Act (15 U.S.C. communications. A debt collector must a debt collector must not advertise for 1681a(f)). disclose in its initial communication sale any debt to coerce payment of the (iii) Any individual is an attorney or with a consumer that the debt collector debt. that any communication is from an is attempting to collect a debt and that (g) Meaningful disclosure of identity. attorney. any information obtained will be used In connection with the collection of a (iv) The consumer committed any for that purpose. If the debt collector’s debt, a debt collector must not place crime or other conduct in order to initial communication with the telephone calls without meaningfully disgrace the consumer. consumer is oral, the debt collector

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00159 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76892 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

must make the disclosure required by payment instrument prior to the date on (b) Prohibition on the sale, transfer for this paragraph again in its initial written such check or instrument. consideration, or placement for communication with the consumer. (d) Charges resulting from collection of certain debts—(1) In (2) Subsequent communications. In concealment of purpose. A debt general. Except as provided in each communication with the consumer collector must not cause charges to be paragraph (b)(2) of this section, a debt subsequent to the communications made to any person for communications collector must not sell, transfer for described in paragraph (e)(1) of this by concealment of the true purpose of consideration, or place for collection a section, the debt collector must disclose the communication. Such charges debt if the debt collector knows or that the communication is from a debt include, but are not limited to, collect should know that the debt has been paid collector. telephone calls and telegram fees. or settled or discharged in bankruptcy. (3) Exception. Disclosures under (e) Nonjudicial action regarding (2) Exceptions—(i) In general. A debt paragraphs (e)(1) and (2) of this section property. A debt collector must not take collector may transfer for consideration are not required in a formal pleading or threaten to take any nonjudicial a debt described in paragraph (b)(1) of made in connection with a legal action. action to effect dispossession or this section if the debt collector: (4) Translated disclosures. A debt disablement of property if: (A) Transfers the debt to the debt’s collector must make the disclosures (1) There is no present right to owner; required by paragraphs (e)(1) and (2) of possession of the property claimed as (B) Transfers the debt to a previous this section in the same language or collateral through an enforceable owner of the debt, if the transfer is languages used for the rest of the security interest; authorized under the terms of the communication in which the debt (2) There is no present intention to original contract between the debt collector conveyed the disclosures. Any take possession of the property; or collector and the previous owner; or translation of the disclosures a debt (3) The property is exempt by law (C) Transfers the debt as a result of a collector uses must be complete and from such dispossession or disablement. merger, acquisition, purchase and (f) Restrictions on use of certain accurate. assumption transaction, or a transfer of media. A debt collector must not: (f) Assumed names. This section does substantially all of the debt collector’s (1) Communicate with a consumer not prohibit a debt collector’s employee assets. regarding a debt by postcard. (ii) Secured claims in bankruptcy. A from using an assumed name when (2) Use any language or symbol, other debt collector may sell, transfer for communicating or attempting to than the debt collector’s address, on any consideration, or place for collection a communicate with a person, provided envelope when communicating with a debt that has been discharged in that the employee uses the assumed consumer by mail, except that a debt bankruptcy if the debt is secured by an name consistently and that the debt collector may use the debt collector’s enforceable lien and the debt collector collector can readily identify any business name on an envelope if such notifies the transferee that the employee using an assumed name. name does not indicate that the debt consumer’s personal liability for the collector is in the debt collection § 1006.22 Unfair or unconscionable debt was discharged in bankruptcy. means. business. (iii) Securitizations and pledges of (3) Communicate or attempt to (a) In general. A debt collector must debt. Paragraph (b)(1) of this section communicate with a consumer by not use unfair or unconscionable means does not prohibit the securitization of a sending an email to an email address to collect or attempt to collect any debt, debt or the pledging of a portfolio of that the debt collector knows is including, but not limited to, the debt as collateral in connection with a provided to the consumer by the conduct described in paragraphs (b) borrowing. through (f) of this section. consumer’s employer, unless the email (c) Multiple debts. If a consumer (b) Collection of unauthorized address is one described in makes any single payment to a debt amounts. A debt collector must not § 1006.6(d)(4)(i) or (iii). collector with respect to multiple debts (4) Communicate or attempt to collect any amount unless such amount owed by the consumer to the debt communicate with a person in is expressly authorized by the collector, the debt collector: agreement creating the debt or permitted connection with the collection of a debt (1) Must not apply the payment to any by law. For purposes of this paragraph, through a social media platform if the debt that is disputed by the consumer; the term ‘‘any amount’’ includes any communication or attempt to and interest, fee, charge, or expense communicate is viewable by the general (2) If applicable, must apply the incidental to the principal obligation. public or the person’s social media payment in accordance with the (c) Postdated payment instruments. A contacts. consumer’s directions. debt collector must not: (g) Safe harbor for certain emails and (d) Legal actions by debt collectors— (1) Accept from any person a check or text messages relating to the collection (1) Action to enforce interest in real other payment instrument postdated by of a debt. A debt collector who property. A debt collector who brings a more than five days unless such person communicates with a consumer by legal action against a consumer to is notified in writing of the debt sending an email or text message in enforce an interest in real property collector’s intent to deposit such check accordance with the procedures securing the consumer’s debt must bring or instrument not more than ten, nor described in § 1006.6(d)(3) does not the action only in a judicial district or less than three, days (excluding legal violate paragraph (a) of this section by similar legal entity in which such real public holidays identified in 5 U.S.C. revealing in the email or text message property is located. 6103(a), Saturdays, and Sundays) prior the debt collector’s name or other (2) Other legal actions. A debt to such deposit. information indicating that the collector who brings a legal action (2) Solicit any postdated check or communication relates to the collection against a consumer other than to enforce other postdated payment instrument for of a debt. an interest in real property securing the the purpose of threatening or instituting § 1006.26 [Reserved] consumer’s debt must bring such action criminal prosecution. only in the judicial district or similar (3) Deposit or threaten to deposit any § 1006.30 Other prohibited practices. legal entity in which the consumer: postdated check or other postdated (a) [Reserved] (i) Signed the contract sued upon; or

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00160 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76893

(ii) Resides at the commencement of (d) Disputes—(1) Failure to dispute. evidence of compliance or the action. The failure of a consumer to dispute the noncompliance with the FDCPA and (3) Authorization of actions. Nothing validity of a debt does not constitute a this part starting on the date that the in this part authorizes debt collectors to legal admission of liability by the debt collector begins collection activity bring legal actions. consumer. on a debt until three years after the debt (e) Furnishing certain deceptive (2) Response to disputes. Upon collector’s last collection activity on the forms. A debt collector must not design, receipt of a dispute submitted by the debt. compile, and furnish any form that the consumer in writing within the (b) Special rule for telephone call debt collector knows would be used to validation period, a debt collector must recordings. If a debt collector records cause a consumer falsely to believe that cease collection of the debt, or any telephone calls made in connection a person other than the consumer’s disputed portion of the debt, until the with the collection of a debt, the debt creditor is participating in collecting or debt collector: collector must retain the recording of attempting to collect a debt that the (i) Sends a copy either of verification each such telephone call for three years consumer allegedly owes to the creditor. of the debt or of a judgment to the after the date of the call. consumer in writing or electronically in § 1006.34 [Reserved] the manner required by § 1006.42; or § 1006.104 Relation to State laws. § 1006.38 Disputes and requests for (ii) In the case of a dispute that the Neither the Act nor the corresponding original-creditor information. debt collector reasonably determines is provisions of this part annul, alter, affect, or exempt any person subject to (a) Definitions. For purposes of this a duplicative dispute, either: the provisions of the Act or the section, the following definitions apply: (A) Notifies the consumer in writing corresponding provisions of this part (1) Duplicative dispute means a or electronically in the manner required from complying with the laws of any dispute submitted by the consumer in by § 1006.42(a)(1) that the dispute is State with respect to debt collection writing within the validation period duplicative, provides a brief statement practices, except to the extent that those that: of the reasons for the determination, and laws are inconsistent with any provision (i) Is substantially the same as a refers the consumer to the debt of the Act or the corresponding dispute previously submitted by the collector’s response to the earlier provisions of this part, and then only to consumer in writing within the dispute; or the extent of the inconsistency. For validation period for which the debt (B) Satisfies paragraph (d)(2)(i) of this purposes of this section, a State law is collector already has satisfied the section. not inconsistent with the Act or the requirements of paragraph (d)(2)(i) of § 1006.42 Sending required disclosures. corresponding provisions of this part if this section; and (a) Sending required disclosures—(1) the protection such law affords any (ii) Does not include new and material In general. A debt collector who sends consumer is greater than the protection information to support the dispute. disclosures required by the Act and this provided by the Act or the (2) Validation period means the part in writing or electronically must do corresponding provisions of this part. thirty-day period after a consumer’s so in a manner that is reasonably receipt of the written notice of debt expected to provide actual notice, and § 1006.108 Exemption for State regulation. described in FDCPA section 809 (15 in a form that the consumer may keep (a) Exemption for State regulation. U.S.C. 1692g) as defined by this part. and access later. Any State may apply to the Bureau for (b)(1) Overshadowing of rights to (2) Exceptions. A debt collector need a determination that, under the laws of dispute or request original-creditor not comply with paragraph (a)(1) of this that State, any class of debt collection information. During the validation section when sending the disclosure practices within that State is subject to period, a debt collector must not engage required by § 1006.6(e) or § 1006.18(e) requirements that are substantially in any collection activities or in writing or electronically, unless the similar to those imposed under sections communications that overshadow or are disclosure is included on a notice 803 through 812 of the Act (15 U.S.C. inconsistent with the disclosure of the required by FDCPA section 809(a) (15 1692a through 1692j) and the consumer’s rights to dispute the debt U.S.C. 1692g(a)), as implemented by this corresponding provisions of this part, and to request the name and address of part, or § 1006.38(c) or (d)(2). and that there is adequate provision for the original creditor. The Bureau may (b) Requirements for certain State enforcement of such requirements. provide by regulation a safe harbor for disclosures sent electronically. To (b) Procedures and criteria. The debt collectors when they use certain comply with paragraph (a) of this procedures and criteria whereby States Bureau-approved disclosures. section, a debt collector who sends the may apply to the Bureau for exemption (2) [Reserved] notice required by FDCPA section of a class of debt collection practices (c) Requests for original-creditor 809(a), as implemented by this part, or within the applying State from the information. (1) Upon receipt of a the disclosures described in § 1006.38(c) provisions of the Act and the request for the name and address of the or (d)(2)(i), electronically must do so in corresponding provisions of this part as original creditor submitted by the accordance with section 101(c) of the provided in section 817 of the Act (15 consumer in writing within the Electronic Signatures in Global and U.S.C. 1692o) are set forth in appendix validation period, a debt collector must National Commerce Act (E–SIGN Act) A of this part. cease collection of the debt until the (15 U.S.C. 7001(c)). debt collector sends the name and Appendix A to Part 1006—Procedures address of the original creditor to the Subpart C—[Reserved] for State Application for Exemption consumer in writing or electronically in From the Provisions of the Act the manner required by § 1006.42. The Subpart D—Miscellaneous I. Purpose and Definitions Bureau may provide by regulation for § 1006.100 Record retention. (a) This appendix establishes procedures alternative procedures when the original and criteria whereby States may apply to the creditor is the same as the current (a) In general. Except as provided in Bureau for exemption of a class of debt creditor. paragraph (b) of this section, a debt collection practices within the applying State (2) [Reserved] collector must retain records that are from the provisions of the Act and the

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00161 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76894 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

corresponding provisions of this part as supporting the claim that the applicant State additional requirements of State law that are provided in section 817 of the Act (15 U.S.C. law provides for adequate administrative not inconsistent with the purpose of the Act 1692o). enforcement. or the requirements imposed under relevant (b) For purposes of this appendix: (d) A statement identifying the office Federal law. (1) Applicant State law means the State designated or to be designated to enforce the (b) In determining whether provisions for law that, for a class of debt collection applicant State law. The statement must enforcement of the applicant State law are practices within that State, is claimed to show how the office provides for adequate adequate, consideration will be given to the contain requirements that are substantially enforcement of the applicant State law, extent to which, under the applicant State similar to the requirements that relevant including by showing that the office has law, provision is made for administrative Federal law imposes on that class of debt necessary facilities, personnel, and funding. enforcement, including necessary facilities, collection practices, and that contains The statement must include, for example, personnel, and funding. adequate provision for State enforcement. complete information regarding the fiscal V. Public Comment (2) Class of debt collection practices arrangements for administrative enforcement includes one or more such classes of debt (including the amount of funds available or In connection with any application that collection practices referred to in paragraph to be provided), the number and has been filed in accordance with the I(b)(1) of this appendix. qualifications of personnel engaged or to be requirements of parts II and III of this appendix and following initial review of the (3) Relevant Federal law means sections engaged in enforcement, and a description of application, a proposed rule concerning the 803 through 812 of the Act (15 U.S.C. 1692a the procedures under which the applicant application for exemption will be published through 1692j) and the corresponding State law is to be enforced by the State. by the Bureau in the Federal Register, and provisions of this part. IV. Criteria for Determination a copy of such application will be made (4) State law includes State statutes, any available for examination by interested regulations that implement State statutes, The Bureau will consider the criteria set persons during business hours at the Bureau and formal interpretations of State statutes or forth below, and any other relevant of Consumer Financial Protection, 1700 G regulations by a court of competent information, in determining whether the Street NW, Washington, DC 20552. A jurisdiction or duly authorized State agency. applicant State law is substantially similar to relevant Federal law and whether there is comment period will be allowed from the II. Application adequate provision for enforcement of the date of such publication for interested parties to submit written comments to the Bureau Any State may apply to the Bureau applicant State law. In making that regarding that application. pursuant to the terms of this appendix for a determination, the Bureau primarily will determination that the applicant State law consider each provision of the applicant VI. Exemption From Requirements State law in comparison with each contains requirements that, for a class of debt If the Bureau determines on the basis of the corresponding provision in relevant Federal collection practices within that State, are information before it that, under the law, and not the State law as a whole in substantially similar to the requirements that applicant State law, a class of debt collection comparison with the Act as a whole. relevant Federal law imposes on that class of practices is subject to requirements (a)(1) In order for the applicant State law debt collection practices, and that the substantially similar to those imposed under applicant State law contains adequate to be substantially similar to relevant Federal relevant Federal law and that there is provision for State enforcement. The law, the applicant State law at least must adequate provision for State enforcement, the application must be in writing, addressed to provide that: Bureau will exempt the class of debt the Assistant Director, Office of Regulations, (i) Definitions and rules of construction, as collection practices in that State from the Division of Research, Markets, and applicable, import a meaning and have an requirements of relevant Federal law and Regulations, Bureau of Consumer Financial application that are substantially similar to section 814 of the Act in the following Protection, 1700 G Street NW, Washington, those prescribed by relevant Federal law. manner and subject to the following DC 20552, signed by the Governor, Attorney (ii) Debt collectors provide all of the conditions: General, or State official having primary applicable notices required by relevant (a) A final rule granting the exemption will enforcement responsibility under the State Federal law, with the content and in the be published in the Federal Register, and the law that applies to the class of debt collection terminology, form, and time periods Bureau will furnish a copy of such rule to the practices, and must be supported by the prescribed pursuant to relevant Federal law. State official who made application for such documents specified in this appendix. The Bureau may determine whether exemption, to each Federal authority additional notice requirements under the III. Supporting Documents responsible for administrative enforcement of applicant State law affect a determination the requirements of relevant Federal law, and The application must be accompanied by that the applicant State law is substantially to the Attorney General of the United States. the following, which may be submitted in similar to relevant Federal law. Any exemption granted will be effective 90 paper or electronic form: (iii) Debt collectors take all affirmative days after the date of publication of such rule (a) A copy of the applicant State law. actions and abide by obligations substantially in the Federal Register. (b) A comparison of each provision of similar to those prescribed by relevant (b) Any State that receives an exemption relevant Federal law with the corresponding Federal law under substantially similar must, through its appropriate official, take provisions of the applicant State law, conditions and within substantially similar the following steps: together with reasons supporting the claim time periods as are prescribed under relevant (i) Inform the Assistant Director, Office of that the corresponding provisions of the Federal law; Regulations, Division of Research, Markets, applicant State law are substantially similar (iv) Debt collectors abide by prohibitions and Regulations, Bureau of Consumer to the provisions of relevant Federal law, and that are substantially similar to those Financial Protection, 1700 G Street NW, an explanation as to why any differences prescribed by relevant Federal law; Washington, DC 20552 in writing within 30 between the State statute or regulation and (v) Consumers’ obligations or days of any change in the applicant State Federal law are not inconsistent with the responsibilities are no more costly, lengthy, law. The report of any such change must provisions of relevant Federal law and do not or burdensome than consumers’ contain copies of the full text of that change, result in a diminution in the protection corresponding obligations or responsibilities together with statements setting forth the otherwise afforded consumers; and a under relevant Federal law; and information and opinions regarding that statement that no other State laws (including (vi) Consumers’ rights and protections are change that are specified in paragraph III. administrative or judicial interpretations) are substantially similar to those provided by (ii) Provide, not later than two years after related to, or would have an effect upon, the relevant Federal law under conditions or the date the exemption is granted, and every State law that is being considered by the within time periods that are substantially two years thereafter, a report to the Bureau Bureau in making its determination. similar to those prescribed by relevant in writing concerning the manner in which (c) A comparison of the provisions of the Federal law. the State has enforced the applicant State law State law that provide for enforcement with (2) In applying the criteria set forth in in the preceding two years and an update of the provisions of section 814 of the Act (15 paragraph IV(a)(1) of this appendix, the the information required under paragraph U.S.C. 1692l), together with reasons Bureau will not consider adversely any III(d) of this appendix.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00162 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76895

(c) The Bureau will inform any State that become subject to the requirements of will be incorporated in the commentary receives such an exemption, through its sections 803 through 812 of the Act and the following publication in the Federal appropriate official, of any subsequent corresponding provisions of this part, 90 Register. amendments of the Act or this part that might days after the date of publication of the final 3. Comment designations. Each comment necessitate the amendment of State law for rule in the Federal Register. in the commentary is identified by a number the exemption to continue. Appendix B to Part 1006—[Reserved] and the regulatory section or paragraph that (d) After an exemption is granted, the it interprets. The comments are designated requirements of the applicable State law Appendix C to Part 1006—Issuance of with as much specificity as possible constitute the requirements of relevant Advisory Opinions according to the particular regulatory Federal law, except to the extent such State provision addressed. For example, comments law imposes requirements not imposed by 1. Advisory opinions. Any act done or to § 1006.6(d)(4) are further divided by the Act or this part. omitted in good faith in conformity with any subparagraph, such as comment 6(d)(4)(i)–1 advisory opinion issued by the Bureau, and comment 6(d)(4)(ii)–1. Comments that VII. Adverse Determination including advisory opinions referenced in have more general application are this appendix, provides the protection (a) If, after publication of a proposed rule designated, for example, as comments 38–1 afforded under section 813(e) of the Act. The in the Federal Register as provided under and 38–2. This introduction may be cited as part V of this appendix, the Bureau finds on Bureau will amend this appendix comments I–1, I–2, and I–3. the basis of the information before it that it periodically to incorporate references to cannot make a favorable determination in advisory opinions that the Bureau issues. Subpart A—General 2. Requests for issuance of advisory connection with the application, the Bureau Section 1006.2—Definitions will notify the appropriate State official of opinions. A request for an advisory opinion the facts upon which such findings are based may be submitted in accordance with the 2(b) Attempt To Communicate instructions regarding submission and and will afford that State authority a 1. Examples. Section 1006.2(b) defines an content of requests applicable to any relevant reasonable opportunity to submit additional attempt to communicate as any act to initiate materials that demonstrate the basis for advisory opinion program that the Bureau offers. Requests for advisory opinions will be a communication or other contact about a granting an exemption. debt with any person through any medium, (b) If, after having afforded the State reviewed consistent with the process outlined in any such program, and any including by soliciting a response from such authority such opportunity to demonstrate person. An act to initiate a communication or the basis for granting an exemption, the resulting advisory opinions will be published other contact about a debt is an attempt to Bureau finds on the basis of the information in the Federal Register and on communicate regardless of whether the before it that it still cannot make a favorable consumerfinance.gov. attempt, if successful, would be a determination in connection with the 3. Bureau-issued advisory opinions. The communication that conveys information application, the Bureau will publish in the Bureau has issued the following advisory regarding a debt directly or indirectly to any Federal Register a final rule containing its opinions: determination regarding the application and a. Safe Harbors from Liability under the person. For example: will furnish a copy of such rule to the State Fair Debt Collection Practices Act for Certain i. Assume that a debt collector places a official who made application for such Actions Taken in Compliance with Mortgage telephone call to a person about a debt. exemption. Servicing Rules under the Real Estate Regardless of whether the debt collector Settlement Procedures Act (Regulation X) reaches the person, the debt collector has VIII. Revocation of Exemption and the Truth in Lending Act (Regulation Z), attempted to communicate with the person. (a) The Bureau reserves the right to revoke 81 FR 71977 (Oct. 19, 2016). ii. Assume that a debt collector places a any exemption granted under the provisions Supplement I to Part 1006—Official telephone call to a person about a debt and leaves a voicemail message. Regardless of of the Act or this part, if at any time it Interpretations determines that the State law does not, in whether the voicemail message consists fact, impose requirements that are Introduction solely of a limited-content message or substantially similar to relevant Federal law 1. Official status. This commentary is the includes content that conveys, directly or or that there is not, in fact, adequate vehicle by which the Bureau of Consumer indirectly, information about a debt, the debt provision for State enforcement. Financial Protection supplements Regulation collector has attempted to communicate with (b) Before revoking any such exemption, F, 12 CFR part 1006. The provisions of the the person. the Bureau will notify the State of the facts commentary are issued under the same 2(d) Communicate or Communication or conduct that, in the Bureau’s opinion, authorities as the corresponding provisions 1. Any medium. Section 1006.2(d) warrant such revocation, and will afford that of Regulation F and have been adopted in provides, in relevant part, that a State such opportunity as the Bureau deems accordance with the notice-and-comment communication can occur through any appropriate in the circumstances to procedures of the Administrative Procedure medium. ‘‘Any medium’’ includes any oral, demonstrate continued eligibility for an Act (5 U.S.C. 553). Unless specified written, electronic, or other medium. For exemption. otherwise, references in this commentary are (c) If, after having been afforded the to sections of Regulation F or the Fair Debt example, a communication may occur in opportunity to demonstrate or achieve Collection Practices Act, 15 U.S.C. 1692 et person or by telephone, audio recording, compliance, the Bureau determines that the seq. No commentary is expected to be issued paper document, mail, email, text message, State has not done so, a proposed rule to other than by means of this Supplement I. social media, or other electronic media. revoke such exemption will be published in 2. Procedure for requesting interpretations. 2. Information regarding a debt. Section the Federal Register. A comment period will Anyone may request that an official 1006.2(d) provides, in relevant part, that a be allowed from the date of such publication interpretation of the regulation be added to communication means conveying for interested persons to submit written this commentary. A request for such an information regarding a debt. A debt collector comments to the Bureau regarding the official interpretation must be in writing and does not convey information regarding a debt intention to revoke. addressed to the Associate Director, Division directly or indirectly to any person if the debt (d) If such exemption is revoked, a final of Research, Markets, and Regulations, collector leaves only a limited-content rule revoking the exemption will be Bureau of Consumer Financial Protection, message, as defined in § 1006.2(j). A debt published by the Bureau in the Federal 1700 G Street NW, Washington, DC 20552. collector who provides marketing or Register, and a copy of such rule will be The request must contain a complete advertising that does not contain information furnished to the State, to the Federal statement of all relevant facts concerning the about a specific debt or debts has not authorities responsible for enforcement of the issue, including copies of all pertinent communicated under § 1006.2(d), even if the requirements of the Act, and to the Attorney documents. Revisions to this commentary debt collector transmits the marketing or General of the United States. The revocation that are adopted in accordance with the advertising message to a consumer, because becomes effective, and the class of debt rulemaking procedures of section 553 of the the debt collector has not conveyed collection practices affected within that State Administrative Procedure Act (5 U.S.C. 553) information regarding a debt.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00163 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76896 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

2(h) Debt message for a consumer does not violate assets, and persons who dispose of the 1. Consumer. Section 1006.2(h) defines § 1006.14(g)’s requirement to meaningfully deceased consumer’s financial assets or other debt to mean, in part, any obligation or disclose the caller’s identity with respect to assets of monetary value extrajudicially. alleged obligation of a consumer to pay that voicemail message. 6(b) Communications With a Consumer money arising out of a transaction. Section 2(j)(1) Required Content 1006.2(e), in turn, defines consumer to mean 6(b)(1) Prohibitions Regarding Unusual or 1. Example. The following example Inconvenient Times or Places any natural person obligated or allegedly illustrates a limited-content message that obligated to pay any debt. Only natural includes only the content described in 1. Designation of inconvenience. Section persons, therefore, can incur debts as defined § 1006.2(j)(1): ‘‘This is Robin Smith calling 1006.6(b)(1) prohibits a debt collector from, in § 1006.2(h). from ABC Inc. Please contact me or Jim among other things, communicating or 2(i) Debt Collector Johnson at 1–800–555–1212.’’ attempting to communicate with a consumer in connection with the collection of any debt 1. In general. Section 1006.2(i) provides, in 2(j)(2) Optional Content at a time or place that the debt collector part, that a debt collector is any person who 1. In general. Section 1006.2(j)(2)(iv) knows or should know is inconvenient to the uses any instrumentality of interstate provides that a limited-content message may consumer, unless an exception in commerce or mail in any business the include a statement that, if the consumer § 1006.6(b)(4) applies. For example, a debt principal purpose of which is the collection replies, the consumer may speak to any of the collector knows or should know that a time of debts, or who regularly collects or attempts company’s representatives or associates. A or place is inconvenient to a consumer if the to collect, directly or indirectly, debts owed message that includes a more detailed consumer uses the word ‘‘inconvenient’’ to or due, or asserted to be owed or due, to description of the representative or associate notify the debt collector. In addition, another. A person who collects or attempts group is not a limited-content message. For depending on the facts and circumstances, to collect defaulted debts that the person has example, a reference to an agent with the the debt collector knows or should know that purchased, but who does not collect or ‘‘credit card receivables group’’ is not a a time or place is inconvenient even if the attempt to collect, directly or indirectly, limited-content message because it includes consumer does not specifically state to the debts owed or due, or asserted to be owed or more than a statement that the consumer’s debt collector that a time or place is due, to another, and who does not have a reply may be answered by a representative or ‘‘inconvenient.’’ The debt collector may ask business the principal purpose of which is associate. follow-up questions regarding whether a time the collection of debts, is not a debt collector 2. Example. The following example or place is convenient to clarify statements as defined in § 1006.2(i). illustrates a limited-content message that by the consumer. For example: 2(j) Limited-Content Message includes the content described in both i. Assume that a creditor places a debt for 1. In general. Section 1006.2(j) provides § 1006.2(j)(1) and (2): ‘‘Hi, this is Robin collection with a debt collector. To facilitate that a limited-content message is a voicemail Smith calling from ABC Inc. It is 4:15 p.m. collection of the debt, the creditor provides message for a consumer that includes all of on Wednesday, September 1. Please contact the debt collector a file that includes recent the content described in § 1006.2(j)(1), that me or any of our representatives at 1–800– notes stating that the consumer cannot be may include any of the content described in 555–1212 today until 6:00 p.m. Eastern time, disturbed on Tuesdays and Thursdays § 1006.2(j)(2), and that includes no other or any weekday from 8:00 a.m. to 6:00 p.m. through the end of the calendar year. Based content. Any other message is not a limited- Eastern time.’’ on these facts, the debt collector knows or should know that Tuesdays and Thursdays content message. If a voicemail message Subpart B—Rules for FDCPA Debt Collectors includes content other than the specific items through the end of the calendar year are described in § 1006.2(j)(1) and (2), and such Section 1006.6—Communications in inconvenient to the consumer. Unless the other content directly or indirectly conveys Connection With Debt Collection consumer informs the debt collector that those times are no longer inconvenient, any information about a debt, the message is 6(a) Consumer a communication, as defined in § 1006.2(d). § 1006.6(b)(1)(i) prohibits the debt collector For example, a voicemail message that Paragraph 6(a)(1) from communicating or attempting to includes a statement that the message is from communicate with the consumer on those 1. Spouse. Section 1006.6(a)(1) provides days through the end of the calendar year. a debt collector and a request to speak to a that, for purposes of § 1006.6, the term particular consumer is not a limited-content ii. Assume that a debt collector calls a consumer includes a consumer’s spouse. The consumer. The consumer answers the call message because it includes more than the surviving spouse of a deceased consumer is required or permitted content. but states ‘‘I am busy’’ or ‘‘I cannot talk a spouse as that term is used in now.’’ The debt collector asks the consumer 2. Message for a consumer. Section § 1006.6(a)(1). 1006.2(j) provides, in part, that a limited- when would be a convenient time. The content message is a voicemail message for Paragraph 6(a)(2) consumer responds, ‘‘on weekdays, except a consumer. A message knowingly left for a 1. Parent. Section 1006.6(a)(2) provides from 3:00 p.m. to 5:00 p.m.’’ The debt third party is not a limited-content message that, for purposes of § 1006.6, the term collector asks the consumer whether there because it is not for a consumer. For consumer includes a consumer’s parent, if would be a convenient time on weekends. example, assume that a debt collector has a the consumer is a minor. A parent of a The consumer responds ‘‘no.’’ Based on these telephone number that the debt collector deceased minor consumer is a parent as that facts, the debt collector knows or should knows belongs to the consumer’s friend. A term is used in § 1006.6(a)(2). know that the time period between 3:00 p.m. voicemail message left after calling that and 5:00 p.m. on weekdays, and all times on Paragraph 6(a)(4) number is not a limited-content message, weekends, are inconvenient to the consumer. even if the message includes no more than 1. Personal representative. Section Thereafter, unless the consumer informs the the content described in § 1006.2(j)(1) and (2) 1006.6(a)(4) provides that, for purposes of debt collector that those times are no longer because the debt collector knowingly left the § 1006.6, the term consumer includes the inconvenient, § 1006.6(b)(1)(i) prohibits the message for someone other than the executor or administrator of the consumer’s debt collector from communicating or consumer. Other provisions of this part may, estate, if the consumer is deceased. The terms attempting to communicate with the in certain circumstances, restrict a debt executor or administrator include the consumer at those times. collector from leaving a limited-content personal representative of the consumer’s iii. Assume that a consumer tells a debt message or otherwise attempting to estate. A personal representative is any collector not to communicate with the communicate with a consumer. See person who is authorized to act on behalf of consumer at a particular place, such as the §§ 1006.6(b) and (c) and 1006.22(f) and their the deceased consumer’s estate. Persons with consumer’s home. The debt collector asks related commentary for further guidance such authority may include personal whether the consumer intends to prohibit the regarding when a debt collector is prohibited representatives under the informal probate debt collector from communicating with the from attempting to communicate with a and summary administration procedures of consumer through all media associated with consumer. many States, persons appointed as universal the consumer’s home, including, for 3. Meaningful disclosure of identity. A debt successors, persons who sign declarations or example, mail. Absent such additional collector who leaves only a limited-content affidavits to effectuate the transfer of estate information, the debt collector knows or

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00164 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76897

should know that communications to the mobile application, § 1006.6(b)(1)(i) does not time (8:00 a.m. Pacific time) and before 9:00 consumer at home, including mail to the prohibit the debt collector from conveying p.m. Eastern time (6:00 p.m. Pacific time). consumer’s home address and calls to the information to the consumer about the debt ii. Assume that a debt collector’s consumer’s home landline telephone through the website or mobile application. information indicates that a consumer has a number, are inconvenient. Thereafter, unless Once the consumer stops navigating the mobile telephone number with an area code the consumer informs the debt collector that website or using the mobile application, associated with the Eastern time zone and a the place is no longer inconvenient, however, § 1006.6(b)(1)(i) prohibits the debt landline telephone number with an area code § 1006.6(b)(1)(ii) prohibits the debt collector collector from further communications or associated with the Mountain time zone. The from communicating or attempting to attempts to communicate on that day. And convenient times to communicate with the communicate with the consumer at the unless the consumer informs the debt consumer are after 10:00 a.m. Eastern time consumer’s home. See comment 6(b)(1)(ii)–1 collector that those times are no longer (8:00 a.m. Mountain time) and before 9:00 for additional guidance regarding inconvenient, § 1006.6(b)(1)(i) prohibits the p.m. Eastern time (7:00 p.m. Mountain time). communications or attempts to communicate debt collector from future communications or Paragraph 6(b)(1)(ii) at an inconvenient place. attempts to communicate with the consumer 1. Communications or attempts to 2. Consumer-initiated communication. If a on Fridays. communicate at unusual or inconvenient consumer initiates a communication with a iv. Assume the same facts as in comment places. Section 1006.6(b)(1)(ii) prohibits a debt collector at a time or from a place that 6(b)(1)–2.iii, except that after the consumer debt collector from communicating or the consumer previously designated as visits the debt collector’s website and uses attempting to communicate with a consumer inconvenient, the debt collector may respond the debt collector’s mobile application, the in connection with the collection of any debt once at that time or place through the same consumer sends an email message to the debt at any unusual place, or at a place that the medium of communication used by the collector at 8:30 p.m. on Friday. Based on debt collector knows or should know is consumer. (For more on medium of these facts, § 1006.6(b)(1)(i) does not prohibit inconvenient to the consumer. Some communication, see § 1006.14(h) and its the debt collector from responding once, communication media, such as mailing associated commentary.) After that response, such as by sending an automated email addresses and landline telephone numbers, § 1006.6(b)(1) prohibits the debt collector message reply generated in response to the are associated with a place. Pursuant to from communicating or attempting to consumer’s email message. Unless the § 1006.6(b)(1)(ii), a debt collector must not communicate further with the consumer at consumer informs the debt collector that communicate or attempt to communicate that time or place until the consumer those times are no longer inconvenient, with a consumer through media associated conveys that the time or place is no longer § 1006.6(b)(1)(i) prohibits the debt collector with an unusual place, or with a place that inconvenient, unless an exception in from future communications or attempts to the debt collector knows or should know is § 1006.6(b)(4) applies. For example: communicate with the consumer on Fridays. inconvenient to the consumer. Other i. Assume the same facts as in comment communication media, such as email Paragraph 6(b)(1)(i) 6(b)(1)–1.ii, except that, after the consumer addresses and mobile telephone numbers, are tells the debt collector that weekdays from 1. Time of electronic communication. not associated with a place. Section 3:00 p.m. to 5:00 p.m. and weekends are Section 1006.6(b)(1)(i) prohibits a debt 1006.6(b)(1)(ii) does not prohibit a debt inconvenient, the consumer sends an email collector from communicating or attempting collector from communicating or attempting message to the debt collector at 3:30 p.m. on to communicate, including through to communicate with a consumer through Wednesday. Based on these facts, electronic communication media, at any such media unless the debt collector knows § 1006.6(b)(1)(i) does not prohibit the debt unusual time, or at a time that the debt that the consumer is at an unusual place, or collector from responding once by email collector knows or should know is at a place that the debt collector knows or message before 5:00 p.m. on that day. Unless inconvenient to the consumer. For purposes should know is inconvenient to the the consumer informs the debt collector that of determining the time of an electronic consumer. For example: those times are no longer inconvenient, communication, such as an email or text i. Assume the same facts as in comment § 1006.6(b)(1)(i) prohibits the debt collector message, under § 1006.6(b)(1)(i), an 6(b)(1)–1.iii. Unless the debt collector knows from future communications or attempts to electronic communication occurs when the that the consumer is at home, a telephone communicate with the consumer on debt collector sends it, not, for example, call to the consumer’s mobile telephone weekdays between 3:00 p.m. and 5:00 p.m. when the consumer receives or views it. number or an electronic communication, and on weekends. Additionally, if the 2. Consumer’s location. Under including, for example, an email message or consumer responds to the debt collector’s § 1006.6(b)(1)(i), in the absence of a debt a text message to the consumer’s mobile email message, the debt collector may collector’s knowledge of circumstances to the telephone, does not violate § 1006.6(b)(1)(ii) continue to respond once to each consumer- contrary, an inconvenient time for even if the consumer receives or views the initiated email message before 5:00 p.m. on communicating with a consumer is before communication while at home. that day. 8:00 a.m. and after 9:00 p.m. local time at the 6(b)(2) Prohibitions Regarding Consumer ii. Assume the same facts as in comment consumer’s location. If a debt collector has Represented by an Attorney 6(b)(1)–1.iii, except that, after the consumer conflicting or ambiguous information 1. Consumer-initiated communications. A tells the debt collector not to communicate regarding a consumer’s location, then, in the consumer-initiated communication from a with the consumer at home, the consumer absence of knowledge of circumstances to the consumer represented by an attorney calls the debt collector from the consumer’s contrary, the debt collector complies with constitutes the consumer’s prior consent to home landline telephone number. Based on § 1006.6(b)(1)(i) if the debt collector that communication under § 1006.6(b)(4)(i); these facts, § 1006.6(b)(1)(ii) does not communicates or attempts to communicate therefore, a debt collector may respond to prohibit the debt collector from responding with the consumer at a time that would be that consumer-initiated communication. once by communicating with the consumer convenient in all of the locations at which However, the consumer’s act of initiating the on that telephone call. Unless the consumer the debt collector’s information indicates the communication does not negate the debt informs the debt collector that the place is no consumer might be located. The following collector’s knowledge that the consumer is longer inconvenient, § 1006.6(b)(1)(ii) examples, which assume that the debt represented by an attorney and does not prohibits the debt collector from future collector has no information about times the revoke the protections afforded the consumer communications or attempts to communicate consumer considers inconvenient or other under § 1006.6(b)(2). After the debt with the consumer at home. information about the consumer’s location, collector’s response, the debt collector must iii. Assume that a consumer tells a debt illustrate the rule. not communicate or attempt to communicate collector that all communications to the i. Assume that a debt collector’s further with the consumer unless the debt consumer on Friday every week are information indicates that a consumer has a collector knows the consumer is not inconvenient to the consumer. On a Friday, mobile telephone number with an area code represented by an attorney with respect to the consumer visits the debt collector’s associated with the Eastern time zone and a the debt, either based on information from website and uses the debt collector’s mobile residential address in the Pacific time zone. the consumer or the consumer’s attorney, or application. Based on these facts, while the The convenient times to communicate with unless an exception under § 1006.6(b)(2)(i) or consumer navigates the website or uses the the consumer are after 11:00 a.m. Eastern (ii) or § 1006.6(b)(4) applies.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00165 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76898 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

6(b)(3) Prohibitions Regarding Consumer’s debt collector that the consumer either § 1006.6(d)(1) if any person has informed the Place of Employment refuses to pay a debt or wants the debt debt collector of that fact. 1. Communications at consumer’s place of collector to cease further communication 6(d)(4) Procedures for Email Addresses employment. Section 1006.6(b)(3) prohibits a with the consumer pursuant to § 1006.6(c)(1). 6(d)(4)(i) Procedures Based on debt collector from communicating or On August 4, the debt collector sends the Communication Between the Consumer and attempting to communicate with a consumer consumer an email message. The debt in connection with the collection of any debt collector receives the consumer’s written the Debt Collector at the consumer’s place of employment, if the notification on August 6. Because the Paragraph 6(d)(4)(i)(B) debt collector knows or has reason to know consumer’s notification is complete upon the 1. Prior consent—in general. Section that the consumer’s employer prohibits the debt collector’s receipt of that information on 1006.6(d)(4)(i)(B) provides that, for purposes consumer from receiving such August 6, the debt collector’s email message of § 1006.6(d)(3)(i), a debt collector may send communication. A debt collector knows or communication on August 4 does not violate an email to an email address if, among other has reason to know that a consumer’s § 1006.6(c)(1). things, the debt collector has received employer prohibits the consumer from 2. Interpretation of the E–SIGN Act. directly from the consumer prior consent to receiving such communication if, for Comment 6(c)(1)–1 constitutes the Bureau’s use the email address to communicate with example, the consumer tells the debt interpretation of section 101 of the E–SIGN the consumer about the debt. For purposes of collector that the consumer cannot take Act as applied to FDCPA section 805(c). § 1006.6(d)(4)(i)(B), a consumer may provide personal calls at work. The debt collector Under this interpretation, section 101(a) of consent directly to a debt collector through may ask follow-up questions regarding the the E–SIGN Act enables a consumer to satisfy any medium of communication, such as in employer’s prohibitions or limitations on the requirement in FDCPA section 805(c) that writing, electronically, or orally. contacting the consumer at the place of the consumer’s notification of the debt 2. Prior consent—consumer-provided email employment to clarify statements by the collector be ‘‘in writing’’ through an address. If a consumer provides an email consumer. electronic request. Further, because the address to a debt collector (including on the 2. Employer-provided email. For special consumer may only satisfy the writing debt collector’s website or online portal), the rules regarding employer-provided email requirement using a medium of electronic debt collector may treat the consumer as addresses, see § 1006.22(f)(3) and its communication through which a debt having consented directly to the debt associated commentary. collector accepts electronic communications from consumers, section 101(b) of the E– collector’s use of the email address to 6(b)(4) Exceptions SIGN Act is not contravened. communicate with the consumer about the Paragraph 6(b)(4)(i) debt for purposes of § 1006.6(d)(4)(i)(B) if the 6(c)(2) Exceptions debt collector discloses clearly and 1. Prior consent—in general. Section 1. Written early intervention notice for conspicuously that the debt collector may 1006.6(b)(4)(i) provides, in part, that the mortgage servicers. The Bureau has use the email address to communicate with prohibitions in § 1006.6(b)(1) through (3) on interpreted the written early intervention the consumer about the debt. a debt collector communicating or attempting notice required by 12 CFR 1024.39(d)(3) to to communicate with a consumer in 6(d)(4)(ii) Procedures Based on fall within the exceptions to the cease Communication by the Creditor connection with the collection of any debt do communication provision in FDCPA section not apply if the debt collector communicates 805(c)(2) and (3). See 12 CFR 1024.39(d)(3), Paragraph 6(d)(4)(ii)(B) or attempts to communicate with the prior its commentary, and the Bureau’s 2016 1. Communications about the account. consent of the consumer. If the debt collector FDCPA Interpretive Rule (81 FR 71977 (Oct. Section 1006.6(d)(4)(ii)(B) provides that, for learns during a communication that the debt 19, 2016)). purposes of § 1006.6(d)(3)(i), a debt collector collector is communicating with the 2. Other mortgage servicing rule provisions. may send an email to an email address if, consumer at an inconvenient time or place, Notwithstanding a consumer’s cease among other things, the creditor used the for example, the debt collector may ask the communication request pursuant to email address to communicate with the consumer during that communication what § 1006.6(c)(1), a mortgage servicer who is consumer about the account giving rise to the time or place would be convenient. However, subject to the FDCPA with respect to a debt. For purposes of § 1006.6(d)(4)(ii)(B), § 1006.6(b)(4)(i) prohibits the debt collector mortgage loan is not liable under the FDCPA communications about the account include, from asking the consumer to consent to the for complying with certain servicing rule for example, required disclosures, bills, continuation of that inconvenient provisions, including requirements to invoices, periodic statements, payment communication. provide a consumer with disclosures reminders, and payment confirmations. 2. Directly to the debt collector. Section regarding the forced placement of hazard Communications about the account do not 1006.6(b)(4)(i) requires the prior consent of insurance as required by 12 CFR 1024.37, a include, for example, marketing or the consumer to be given directly to the debt disclosure regarding an adjustable-rate advertising materials unrelated to the collector. For example, a debt collector mortgage’s initial interest rate adjustment as consumer’s account. cannot rely on the prior consent of the consumer given to a creditor or to a previous required by 12 CFR 1026.20(d), and a Paragraph 6(d)(4)(ii)(C) debt collector. periodic statement for each billing cycle as required by 12 CFR 1026.41. See CFPB 1. Clear and conspicuous. Clear and 6(c) Communications With a Consumer— Bulletin 2013–12 (Oct. 15, 2013) providing conspicuous means readily understandable. After Refusal To Pay or Cease implementation guidance for certain In the case of written and electronic Communication Notice mortgage servicing rules. disclosures, the location and type size also must be readily noticeable and legible to 6(c)(1) Prohibitions 6(d) Communications With Third Parties consumers, although no minimum type size 1. Notification complete upon receipt. If, 6(d)(2) Exceptions is mandated. pursuant to § 1006.6(c)(1), a consumer 2. Sample language. Section notifies a debt collector in writing or 1. Prior consent. See the commentary to 1006.6(d)(4)(ii)(C) provides that, for purposes electronically using a medium of electronic § 1006.6(b)(4)(i) for guidance concerning a of § 1006.6(d)(3)(i), a debt collector may send communication through which a debt consumer giving prior consent directly to a an email to an email address if, among other collector accepts electronic communications debt collector. things, the creditor sent the consumer a from consumers that the consumer either 6(d)(3) Reasonable Procedures for Email and written or electronic notice that clearly and refuses to pay a debt or wants the debt Text Message Communications conspicuously disclosed that the debt would collector to cease further communication be transferred to the debt collector; that the with the consumer, notification is complete Paragraph 6(d)(3)(ii) debt collector might use the email address to upon the debt collector’s receipt of that 1. Knowledge of prohibited disclosure. For communicate with the consumer about the information. The following example purposes of § 1006.6(d)(3)(ii), a debt collector debt; that, if others have access to this email illustrates the rule. knows that sending an email to an email address, then it is possible they may see the i. Assume that on August 3, a consumer address or a text message to a telephone emails; instructions for a reasonable and places in the mail a written notification to a number has led to a disclosure prohibited by simple method by which the consumer could

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00166 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76899

opt out of such communications; and the receives the opt-out notice electronically to subscription. Such a name does not include date by which the debt collector or creditor opt out by postal mail, telephone, or visiting one that is reserved for use by specific must receive the consumer’s request to opt a website without providing a link does not registrants, such as a domain name branded out. meet the requirement to provide a reasonable for use by a particular commercial entity i. When a creditor sends the notice in and simple method for opting out. (e.g., [email protected]) or writing, the creditor may use, but is not Paragraph 6(d)(4)(ii)(C)(5) reserved for particular types of institutions required to use, the following language to (e.g., [email protected], john.doe@ satisfy § 1006.6(d)(4)(ii)(C): ‘‘We are 1. Recipient of opt-out request. Under university.edu, or [email protected]). transferring your account to ABC debt § 1006.6(d)(4)(ii)(C)(5), the notice must 2. Knowledge of employer-provided email collector, and we are providing ABC debt clearly and conspicuously disclose the date address. For purposes of § 1006.6(d)(4)(ii)(E), collector with the following email address for by which a debt collector or creditor must a debt collector knows that an email address you: [email address]. ABC debt collector may receive a consumer’s request to opt out, is provided by the consumer’s employer if use this email address to communicate with which must be at least 35 days after the date any person has informed the debt collector you about the debt. If others have access to the notice is sent. The notice may instruct the that the address is employer provided. this email address, then it is possible they consumer to respond to the debt collector or However, § 1006.6(d)(4)(ii)(E) does not may see the emails. If you would like to opt to the creditor but not to both. require a debt collector to conduct a manual out of communications by ABC debt collector Paragraph 6(d)(4)(ii)(D) review of consumer accounts to determine to [email address], please fill out the 1. Effect of opt-out request after expiration whether an email address might be employer enclosed form and return it in the enclosed of opt-out period. If a consumer requests after provided. envelope so that we receive it by [date].’’ the expiration of the opt-out period that the 6(d)(4)(iii) Procedures Based on ii. When a creditor sends the notice debt collector not communicate using the Communication by the Prior Debt Collector electronically, the creditor may use, but is email address identified in the opt-out not required to use, the following language to 1. Immediately prior debt collector. Section notice, such as by returning the notice or 1006.6(d)(4)(iii) provides that, for purposes of satisfy § 1006.6(d)(4)(ii)(C): ‘‘We are opting out under § 1006.6(e), § 1006.14(h)(1) transferring your account to ABC debt § 1006.6(d)(3)(i), a debt collector may send an prohibits the debt collector from email to an email address if, among other collector, and we are providing ABC debt communicating or attempting to collector with the following email address for things, the immediately prior debt collector communicate with the consumer using that used the email address to communicate with you: [email address]. ABC debt collector may email address. If the consumer requests after use this email address to communicate with the consumer about the debt. For purposes of the expiration of the opt-out period that the § 1006.6(d)(4)(iii), the immediately prior debt you about the debt. If others have access to debt collector not communicate with the this email address, then it is possible they collector is the debt collector immediately consumer by email, § 1006.14(h)(1) prohibits preceding the current debt collector. For may see the emails. If you would like to opt the debt collector from communicating or out of communications by ABC debt collector example, if ABC debt collector returns a debt attempting to communicate with the to [email address], please click here by to the creditor and the creditor places the consumer by email, including by using the [date].’’ debt with XYZ debt collector, ABC debt specific email address identified in the 3. Combined notice. A notice provided by collector is the immediately prior debt notice. For more on prohibited the creditor under § 1006.6(d)(4)(ii)(C) may collector for purposes of § 1006.6(d)(4)(iii). communication media and certain be contained in a larger communication that 2. Examples. The following examples exceptions, see § 1006.14(h) and its conveys other information, as long as the illustrate the rule. associated commentary. If after the expiration notice is clear and conspicuous. i. After obtaining a consumer’s email of the opt-out period the consumer notifies address in accordance with the procedures in Paragraph 6(d)(4)(ii)(C)(1) the debt collector in writing or electronically § 1006.6(d)(4)(i) or (ii), ABC debt collector 1. Identification of the debt collector. using a medium of electronic communication communicates with the consumer about the Under § 1006.6(d)(4)(ii)(C)(1), the notice must through which a debt collector accepts debt using that email address and the clearly and conspicuously disclose, among electronic communications from consumers consumer does not opt out. ABC debt other things, that the debt has been or will that the consumer refuses to pay the debt or collector returns the debt to the creditor, who be transferred to the debt collector. To satisfy wants the debt collector to cease further places it with XYZ debt collector. XYZ debt this requirement, the notice must identify the communication with the consumer, collector communicates with the consumer name of the specific debt collector to which § 1006.6(c)(1) prohibits the debt collector about the debt using the email address the debt has been or will be transferred. from communicating or attempting to obtained by ABC debt collector. Assuming Paragraph 6(d)(4)(ii)(C)(4) communicate with the consumer with that the requirements of § 1006.6(d)(3)(ii) are respect to the debt, subject to the exceptions satisfied, XYZ debt collector may have a bona 1. Reasonable and simple method to opt in § 1006.6(c)(2). For more on fide error defense to civil liability for any out. Under § 1006.6(d)(4)(ii)(C)(4), the notice communications with a consumer after unintentional third-party disclosure that must clearly and conspicuously disclose refusal to pay or a cease communication occurs during that communication because a instructions for a reasonable and simple notice, see § 1006.6(c) and its associated prior debt collector (i.e., ABC debt collector) method by which the consumer can opt out commentary. obtained the email address in accordance of the debt collector’s use of the email 2. Scope of opt-out request. In the absence with the procedures in § 1006.6(d)(4)(i) or address to communicate about the debt. The of evidence that the consumer refuses to pay (ii), the immediately prior debt collector (i.e., following examples illustrate the rule. the debt or wants the debt collector to cease ABC debt collector) used the email address i. When the creditor sends the notice in all communication with the consumer, a to communicate with the consumer about the writing, reasonable and simple methods for consumer’s request under debt, and the consumer did not opt out of opting out include providing a reply form § 1006.6(d)(4)(ii)(D) to opt out of a debt such communications by ABC debt collector. and a pre-addressed envelope together with collector’s use of a particular email address ii. After obtaining a consumer’s email the opt-out notice. Requiring a consumer to to communicate with the consumer by email address in accordance with the procedures in call or write to obtain a form for opting out, does not constitute a notification to cease § 1006.6(d)(4)(i) or (ii), ABC debt collector rather than including the form with the opt- further communication with respect to the communicates with the consumer about the out notice, does not meet the requirement to debt under § 1006.6(c)(1). debt using that email address and the provide a reasonable and simple method for consumer does not opt out. ABC debt opting out. Paragraph 6(d)(4)(ii)(E) collector returns the debt to the creditor, who ii. When the creditor sends the notice 1. Domain name available for use by the places it with EFG debt collector. EFG debt electronically, reasonable and simple general public. Under § 1006.6(d)(4)(ii)(E), collector communicates with the consumer methods for opting out include providing an the domain name of an email address is about the debt using the email address electronic means to opt out, such as a available for use by the general public when obtained by ABC debt collector, and the hyperlink, or allowing the consumer to opt multiple members of the general public are consumer does not opt out. EFG debt out by replying to the communication with permitted to use the same domain name, collector returns the debt to the creditor, who the word ‘‘stop.’’ Requiring a consumer who whether for free or through a paid places it with XYZ debt collector. XYZ debt

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00167 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76900 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

collector communicates with the consumer Paragraph 6(d)(5)(ii) Section 1006.10—Acquisition of Location about the debt using the email address 1. Prior consent. See comment Information obtained by ABC debt collector and used by 6(d)(4)(i)(B)–1 for guidance concerning how 10(a) Definition EFG debt collector. Assuming that the a consumer may provide prior consent requirements of § 1006.6(d)(3)(ii) are 1. Location information about deceased directly to a debt collector. See comment consumers. If a consumer obligated or satisfied, XYZ debt collector may have a bona 6(d)(4)(i)(B)–2 for guidance concerning when fide error defense to civil liability for any allegedly obligated to pay any debt is a debt collector may treat a consumer who deceased, location information includes the unintentional third-party disclosure that provides a telephone number for text occurs during that communication because a information described in § 1006.10(a) for a messages as having consented directly to the person who is authorized to act on behalf of prior debt collector (i.e., ABC debt collector) debt collector. obtained the email address in accordance the deceased consumer’s estate, as described in § 1006.6(a)(4) and its associated with the procedures in § 1006.6(d)(4)(i) or 6(e) Opt-Out Notice for Electronic commentary. (ii), the immediately prior debt collector (i.e., Communications or Attempts To EFG debt collector) used the email address to Communicate 10(b) Form and Content of Location communicate with the consumer about the 1. In general. Section 1006.6(e) requires a Communications debt, and the consumer did not opt out of debt collector who communicates or attempts Paragraph 10(b)(2) such communications by EFG debt collector. to communicate with a consumer 1. Executors, administrators, or personal iii. After obtaining a consumer’s email electronically in connection with the representatives of a deceased consumer’s address in accordance with the procedures in collection of a debt using a specific email estate. Section 1006.10(b)(2) prohibits a debt § 1006.6(d)(4)(i) or (ii), ABC debt collector address, telephone number for text messages, collector who is communicating with any communicates with the consumer about the or other electronic-medium address to person other than the consumer for the debt using that email address and the include in such communication or attempt to purpose of acquiring location information consumer does not opt out. ABC debt communicate a clear and conspicuous about the consumer from stating that the collector returns the debt to the creditor, who statement describing a reasonable and simple consumer owes any debt. If the consumer places it with EFG debt collector, who method by which the consumer can opt out obligated or allegedly obligated to pay the chooses not to communicate with the of further electronic communications or debt is deceased, and the debt collector is consumer by email. EFG debt collector attempts to communicate by the debt attempting to locate the person who is returns the debt to the creditor, who places collector to that address or telephone authorized to act on behalf of the deceased it with XYZ debt collector. XYZ debt number. See comment 6(d)(4)(ii)(C)–1 for consumer’s estate, the debt collector does not collector communicates with the consumer guidance on the meaning of clear and violate § 1006.10(b)(2) by stating that the debt about the debt using the email address conspicuous. See comment 6(d)(4)(ii)(C)(4)–1 collector is seeking to identify and locate the obtained by ABC debt collector. Section for guidance on the meaning of reasonable person who is authorized to act on behalf of 1006.6(d)(4)(iii) does not provide XYZ debt and simple. The following examples the deceased consumer’s estate. The debt collector with a bona fide error defense to illustrate the rule. collector may also state that the debt civil liability for any unintentional third- i. Assume that a debt collector sends a text collector is seeking to identify and locate the party disclosure that occurs during that message to a consumer’s mobile telephone person handling the financial affairs of the communication because the immediately number. The text message includes the deceased consumer. For more on executors, prior debt collector (i.e., EFG debt collector) following instruction: ‘‘Reply STOP to stop administrators, and personal representatives, did not use the email address to texts to this telephone number.’’ Assuming see § 1006.6(a)(4) and its associated communicate with the consumer about the that it is readily noticeable and legible to commentary. debt. consumers, this instruction constitutes a Section 1006.14—Harassing, Oppressive, or 6(d)(5) Procedures for Telephone Numbers clear and conspicuous statement describing a Abusive Conduct reasonable and simple method to opt out of for Text Messages 14(a) In General receiving further text messages from the debt 1. Complete and accurate database. collector to that telephone number consistent 1. General prohibition. Section 1006.14(a), Section 1006.6(d)(5)(i) and (ii) provides that, with § 1006.6(e). No minimum type size is which implements FDCPA section 806 (15 for purposes of § 1006.6(d)(3)(i), a debt mandated. U.S.C. 1692d), sets forth a general standard collector may send a text message to a ii. Assume that a debt collector sends the that prohibits a debt collector from engaging telephone number if, among other things, the consumer an email that includes a hyperlink in any conduct the natural consequence of debt collector confirms, using a complete and labeled: ‘‘Click here to opt out of further which is to harass, oppress, or abuse any accurate database, that the telephone number person in connection with the collection of emails to this email address.’’ Assuming that has not been reassigned from the consumer a debt. The general prohibition covers the it is readily noticeable and legible to to another user. For purposes of specific conduct described in § 1006.14(b) consumers, this instruction constitutes a § 1006.6(d)(5)(i) and (ii), the database through (h), as well as any conduct by the clear and conspicuous statement describing a established by the FCC in In re Advanced debt collector that is not specifically reasonable and simple method to opt out of Methods to Target & Eliminate Unlawful prohibited by § 1006.14(b) through (h) but the receiving further emails from the debt Robocalls (33 FCC Rcd. 12024 (Dec. 12, natural consequence of which is to harass, collector to that email address consistent 2018)) qualifies as a complete and accurate oppress, or abuse any person in connection with § 1006.6(e). No minimum type size is database, as does any commercially available with the collection of a debt. Such conduct mandated. database that is substantially similar in terms can occur regardless of the communication iii. Assume that a debt collector sends the of completeness and accuracy to the FCC’s media the debt collector uses, including in- consumer an email that includes instructions database. person interactions, telephone calls, audio in a textual format explaining that the recordings, paper documents, mail, email, Paragraph 6(d)(5)(i) consumer may opt out of receiving further text messages, social media, or other 1. Response to telephone call by consumer. email communications from the debt electronic media, even if not specifically Section 1006.6(d)(5)(i) provides that, for collector to that email address by replying addressed by § 1006.14(b) through (h). The purposes of § 1006.6(d)(3)(i), a debt collector with the word ‘‘stop’’ in the subject line. following example illustrates the rule. may send a text message to a telephone Assuming that it is readily noticeable and i. Assume that, in connection with the number if, among other things, the consumer legible to consumers, this instruction collection of a debt, a debt collector sends a used the telephone number to communicate constitutes a clear and conspicuous consumer numerous, unsolicited text by text message with the debt collector about statement describing a reasonable and simple messages per day for several consecutive the debt. Section 1006.6(d)(5)(i) does not method to opt out of receiving further emails days. The consumer does not respond. apply if the consumer used the telephone from the debt collector to that email address Assume further that the debt collector does number to communicate only by telephone consistent with § 1006.6(e). No minimum not communicate or attempt to communicate call with the debt collector about the debt. type size is mandated. with the consumer using any other

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00168 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76901

communication medium and that, by sending 14(b)(1) In General Tuesday, April 7, the debt collector has the text messages, the debt collector has not 1. Effect of compliance. A debt collector placed seven telephone calls to the consumer violated § 1006.14(b) through (h). Even who complies with § 1006.14(b)(1) and in connection with the collection of the though the debt collector’s conduct does not FDCPA section 806(5) (15 U.S.C. 1692d(5)) credit card debt within the period of seven violate any specific prohibition under complies with § 1006.14(a) and FDCPA consecutive days that started on Wednesday, § 1006.14(b) through (h), it is likely that the section 806 (15 U.S.C. 1692d) solely with April 1. Assume the debt collector does not natural consequence of the debt collector’s respect to the frequency of its telephone place any additional telephone calls about text messages is to harass, oppress, or abuse calls. The debt collector nevertheless could the debt until Wednesday, April 8. Under the person receiving the text messages; when violate § 1006.14(a) and FDCPA section 806 § 1006.14(b)(2)(i), the debt collector is such natural consequence occurs, the debt if the natural consequence of another aspect presumed to comply with § 1006.14(b)(1) and collector has violated § 1006.14(a) and of the debt collector’s telephone calls, FDCPA section 806(5). FDCPA section 806. unrelated to frequency, is to harass, oppress, ii. On Thursday, August 13, a consumer 2. Cumulative effect of conduct. Whether a or abuse any person in connection with the places a telephone call to, and initiates a debt collector’s conduct violates the general collection of a debt. See also comment 14(a)– telephone conversation with, a debt collector standard in § 1006.14(a) may depend on the 2 regarding the cumulative effect of the debt regarding a particular debt. Assume that the cumulative effect of the debt collector’s collector’s conduct. debt collector does not place a telephone call conduct through any communication 2. Example. Assume that a debt collector to the consumer in connection with the medium the debt collector uses, including in- communicates or attempts to communicate collection of that debt again prior to person interactions, telephone calls, audio with a consumer about a particular debt only Thursday, August 20. The debt collector is recordings, paper documents, mail, email, by telephone. The debt collector does not presumed to comply with § 1006.14(b)(1) and text messages, social media, or other exceed either of the telephone call FDCPA section 806(5). electronic media. Depending on the facts and frequencies described in § 1006.14(b)(2)(i). iii. On Tuesday, October 6, a debt collector circumstances, conduct that on its own Under § 1006.14(b)(2)(i), the debt collector is first attempts to communicate with a would violate neither the general prohibition presumed to comply with § 1006.14(b)(1). particular third party for the purpose of in § 1006.14(a), nor any specific prohibition Assume, further, that no evidence is offered acquiring location information about a in § 1006.14(b) through (h), nonetheless may to rebut that presumption of compliance. consumer by placing a telephone call to that violate § 1006.14(a) when such conduct is Pursuant to § 1006.14(b)(1), the debt collector third party. The call is unanswered. The debt evaluated cumulatively with other conduct. complies with § 1006.14(a) and FDCPA collector places up to six more unanswered The following example illustrates the rule as section 806, but only with respect to the telephone calls to that third party for the applied to a debt collector who uses multiple frequency of its telephone calls. Assume, purpose of acquiring location information communication media to communicate or however, that one of the debt collector’s about the consumer through Monday, attempt to communicate with a person. telephone calls results in the debt collector October 12. The debt collector is presumed i. Assume that a debt collector places seven leaving a voicemail that contains obscene to comply with § 1006.14(b)(1) and FDCPA unanswered telephone calls within seven language. Even though the debt collector section 806(5). See § 1006.10(c) for further consecutive days to a consumer in does not violate § 1006.14(a) and FDCPA guidance concerning when a debt collector is connection with the collection of a debt. section 806 based solely on the frequency of prohibited from communicating with a During this same period, the debt collector the telephone calls, the debt collector’s person other than the consumer for the also sends multiple additional unsolicited obscene voicemail would violate § 1006.14(a) purpose of acquiring location information. emails about the debt to the consumer. The and (d) and FDCPA section 806 and 806(2) 2. Factors to rebut the presumption of consumer does not respond. The frequency of (15 U.S.C. 1692, 1692d(2)). compliance. To rebut the presumption of compliance, it must be proven that a debt the debt collector’s telephone calls during the 14(b)(2) Telephone Call Frequencies; collector who did not place a telephone call seven-day period does not exceed the Presumptions of Compliance and Violation telephone call frequencies described in in excess of either of the telephone call § 1006.14(b)(2)(i), so the debt collector is Paragraph 14(b)(2)(i) frequencies described in § 1006.14(b)(2)(i) presumed to comply with § 1006.14(b)(1). 1. Presumption of compliance; examples. nevertheless placed a telephone call or Assume further that no evidence is offered to Section 1006.14(b)(2)(i) provides that a debt engaged a person in telephone conversation rebut the presumption of compliance, such collector is presumed to comply with repeatedly or continuously with intent to that the debt collector complies with § 1006.14(b)(1) and FDCPA section 806(5) (15 annoy, abuse, or harass any person at the § 1006.14(b)(1). Also assume that, for U.S.C. 1692d(5)) if the debt collector places called number. For purposes of determining purposes of this illustrative example only, a telephone call to a particular person in whether the presumption of compliance has the frequency of the debt collector’s emails connection with the collection of a particular been rebutted, it is assumed that debt alone does not violate § 1006.14(a). It debt neither: More than seven times within collectors intend the natural consequence of nevertheless is likely that the cumulative seven consecutive days their actions. Comments 14(b)(2)(i)–2.i effect of the debt collector’s telephone calls (§ 1006.14(b)(2)(i)(A)); nor within a period of through .iv provide a non-exhaustive list of and emails is harassment; when such natural seven consecutive days after having had a factors that may rebut the presumption of consequence occurs, the debt collector has telephone conversation with the person in compliance. The factors may be considered violated § 1006.14(a) and FDCPA section 806. connection with the collection of such debt either individually or in combination with (§ 1006.14(b)(2)(i)(B)). For the presumption of one another (or other non-specified factors). 14(b) Repeated or Continuous Telephone compliance to apply, the debt collector’s The factors may be viewed in light of any Calls or Telephone Conversations telephone call frequencies must not exceed other relevant facts and circumstances and 1. Placing telephone calls repeatedly or either prong of § 1006.14(b)(2)(i). The therefore may apply to varying degrees. continuously. Section 1006.14(b) prohibits a telephone call frequencies are subject to the Factors that may rebut the presumption of debt collector from, in connection with the exclusions in § 1006.14(b)(3). In addition, for compliance include: collection of a debt, placing telephone calls purposes of § 1006.14(b)(2)(i)(B), the date of i. The frequency and pattern of telephone or engaging any person in telephone the telephone conversation is the first day of calls the debt collector places to a person, conversation repeatedly or continuously with the seven-consecutive-day period. The including the intervals between them. The intent to annoy, abuse, or harass any person following examples illustrate the rule. considerations relevant to this factor include at the called number, and it describes when i. On Wednesday, April 1, a debt collector whether the debt collector placed telephone a debt collector is presumed to have first attempts to communicate with a calls to a person in rapid succession (e.g., complied with or violated that prohibition. consumer in connection with the collection two unanswered telephone calls to the same For purposes of § 1006.14(b)(1) through (4), of a credit card debt by placing a telephone telephone number within five minutes) or in ‘‘placing a telephone call’’ includes call and leaving a limited-content message. a highly concentrated manner (e.g., seven conveying a ringless voicemail but does not Between Thursday, April 2, and Tuesday, telephone calls to the same telephone include sending an electronic message (e.g., April 7, the debt collector places six more number within one day). For example, a text message or an email) that may be telephone calls to the consumer about the assume the same facts as in comment received on a mobile telephone. debt, all of which go unanswered. As of 14(b)(2)(i)–1.i, except assume that, after the

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00169 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76902 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

debt collector placed the first telephone call Monday, and again on Wednesday, by a non-exhaustive list of factors that may rebut to the consumer about the credit card debt on placing one unanswered telephone call to a the presumption of a violation. The factors Wednesday, April 1, the debt collector particular telephone number on each of those may be considered either individually or in placed six additional telephone calls to the days. On Thursday, the debt collector learns combination with one another (or other non- consumer about that debt on Friday, April 3. that the telephone number belongs to specified factors). The factors may be viewed Under § 1006.14(b)(2)(i), the debt collector is someone else and that the consumer does not in light of any other relevant facts and presumed to comply with § 1006.14(b)(1) and answer telephone calls to that number. For circumstances and therefore may apply to FDCPA section 806(5), but the high purposes of § 1006.14(b)(2)(i), the debt varying degrees. Factors that may rebut the concentration of telephone calls on Friday, collector has not yet placed any telephone presumption of a violation include: April 3, is a factor that may rebut the calls to that consumer during that seven- i. Whether a debt collector placed a presumption of compliance. consecutive-day period. telephone call to comply with, or as required ii. The frequency and pattern of any Paragraph 14(b)(2)(ii) by, applicable law. For example, assume the voicemails that the debt collector leaves for same facts as in comment 14(b)(2)(ii)–1.i, a person, including the intervals between 1. Presumption of a violation; examples. except assume that the debt collector placed them. The considerations relevant to this Section 1006.14(b)(2)(ii) provides that a debt the final telephone call of the seven- factor include whether the debt collector left collector is presumed to violate consecutive-day period to inform the voicemails for a person in rapid succession § 1006.14(b)(1) and FDCPA section 806(5) (15 consumer of available loss mitigation options (e.g., two voicemails within five minutes left U.S.C. 1692d(5)) if the debt collector places in compliance with the Bureau’s mortgage at the same telephone number) or in a highly a telephone call to a particular person in servicing rules under Regulation X, 12 CFR concentrated manner (e.g., seven voicemails connection with the collection of a particular 1024.39(a). The debt collector’s compliance left at the same telephone number within one debt in excess of either of the telephone call with applicable law is a factor that may rebut day). frequencies described in § 1006.14(b)(2)(i). the presumption of a violation. iii. The content of a person’s prior The telephone call frequencies are subject to ii. Whether a debt collector placed a communications with the debt collector. the exclusions in § 1006.14(b)(3). The telephone call that was directly related to Among the considerations relevant to this following examples illustrate the rule. active litigation involving the collection of a factor are whether the person previously i. On Wednesday, April 1, a debt collector particular debt. For example, assume the informed the debt collector, for example, that first attempts to communicate with a same facts as in comment 14(b)(2)(ii)–1.ii, the person did not wish to be contacted again consumer in connection with the collection except assume that, after the debt collector about the particular debt, that the person was of a mortgage debt by placing a telephone call and the consumer had a telephone and leaving a limited-content message. On refusing to pay the particular debt, or that the conversation about the credit card debt on each of the next three business days (i.e., on person did not owe the particular debt. This Friday, August 14, the debt collector placed Thursday, April 2, Friday, April 3, and factor also includes a consumer’s cease another telephone call to the consumer Monday, April 6), the debt collector places communication notification described in before Friday, August 21, to complete a § 1006.6(c) and a consumer’s request under two additional telephone calls to the court-ordered communication with the § 1006.14(h) that the debt collector not use consumer about the debt, all of which go consumer about the debt, or as part of telephone calls to communicate or attempt to unanswered. On Tuesday, April 7, the debt negotiations to settle active debt collection communicate with the consumer. The collector places an additional telephone call litigation regarding the debt. The direct amount of time elapsed since any such prior to the consumer about the debt. The debt relationship between the additional communications also may be relevant to this collector has placed a total of eight telephone telephone call and the active debt collection factor. calls to the consumer about the debt during litigation is a factor that may rebut the iv. The debt collector’s conduct in prior the seven-day period starting Wednesday, presumption of a violation. communications or attempts to communicate April 1. None of the calls was subject to the with the person. Among the considerations exclusions in § 1006.14(b)(3). The debt iii. Whether a debt collector placed a relevant to this factor are whether, during a collector is presumed to violate telephone call in response to a consumer’s prior communication or attempt to § 1006.14(b)(1) and FDCPA section 806(5). request for additional information when the communicate with a person, the debt ii. On Tuesday, August 11, a debt collector exclusion in § 1006.14(b)(3)(i) for telephone collector, for example, used obscene, profane, first attempts to communicate with a calls made with the consumer’s prior consent or otherwise abusive language (see consumer in connection with the collection given directly to the debt collector did not § 1006.14(d)), used or threatened to use of a credit card debt by placing a telephone apply. For example, assume the same facts as violence or other criminal means to harm the call to the consumer that the consumer does in comment 14(b)(2)(ii)–1.ii, except assume person (see § 1006.14(c)), or called at an not answer. On Friday, August 14, the debt that, during the telephone conversation about inconvenient time or place (see collector again places a telephone call to the the credit card debt on Friday, August 14, the § 1006.6(b)(1)). The amount of time elapsed consumer and has a telephone conversation consumer told the debt collector that the since any such prior communications or with the consumer in connection with the consumer would like more information about attempts to communicate also may be collection of the debt. Subject to the the amount of the debt but that the consumer relevant to this factor. exclusions in § 1006.14(b)(3), the debt could not talk at that moment. The consumer 3. Misdirected telephone calls. Section collector is presumed to violate ended the telephone call before the debt 1006.14(b)(2)(i) provides that a debt collector § 1006.14(b)(1) and FDCPA section 806(5) if collector could seek prior consent under is presumed to comply with § 1006.14(b)(1) the debt collector places a telephone call to § 1006.14(b)(3)(i) to call back with the and FDCPA section 806(5) (15 U.S.C. the consumer in connection with the requested information. The debt collector 1692d(5)) if the debt collector’s telephone collection of that debt again prior to Friday, placed another telephone call to the call frequencies do not exceed the telephone August 21. consumer prior to Friday, August 21, to call frequencies described in 2. Factors to rebut the presumption of a provide the requested information. The fact § 1006.14(b)(2)(i). If, within a period of seven violation. To rebut the presumption of a that the debt collector placed the additional consecutive days, a debt collector attempts to violation, it must be proven that a debt telephone call in response to the consumer’s communicate with a particular person by collector who placed telephone calls in request is a factor that may rebut the placing telephone calls to a particular excess of either of the frequencies described presumption of a violation. telephone number, and the debt collector in § 1006.14(b)(2)(i) nevertheless did not iv. Whether a debt collector placed a then learns that the telephone number is not place a telephone call or engage any person telephone call to convey information to the that person’s number, the telephone calls that in telephone conversation repeatedly or consumer that, as shown through evidence, the debt collector made to that number are continuously with intent to annoy, abuse, or would provide the consumer with an not considered to have been telephone calls harass any person at the called number. For opportunity to avoid a demonstrably negative placed to that person during that seven- purposes of determining whether the effect relating to the collection of the consecutive-day period for purposes of presumption of a violation has been rebutted, particular debt, where the negative effect was § 1006.14(b)(2)(i). For example: it is assumed that debt collectors intend the not in the debt collector’s control, and where i. Assume that a debt collector first natural consequence of their actions. time was of the essence. For example, in each attempts to communicate with a consumer on Comments 14(b)(2)(ii)–2.i through .iv provide of the following three scenarios, assume the

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00170 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76903

same facts as in comment 14(b)(2)(ii)–1.ii, with a consumer as prohibited by can call me at 123–456–7891 to discuss the and also assume that: §§ 1006.6(b) and 1006.14(h). repayment options.’’ The debt collector A. During the telephone conversation 2. Duration of prior consent. For purposes receives the consumer’s prior consent by about the credit card debt on Friday, August of § 1006.14(b)(3)(i), if a person gives prior email on Thursday, June 4, and thereafter 14, the debt collector and the consumer consent for additional telephone calls about places eight unanswered telephone calls to engaged in a lengthy conversation regarding a particular debt directly to a debt collector, the consumer between Monday, June 8, and settlement terms, and, toward the end of the any telephone calls that the debt collector Wednesday, June 10. Because the consumer conversation, the telephone call dropped. thereafter places to the person about that provided prior consent directly to the debt The debt collector immediately placed an particular debt do not count toward the collector, the exclusion in § 1006.14(b)(3)(i) additional telephone call to the consumer to telephone call frequencies described in applies to the eight telephone calls placed by complete the conversation. The fact that the § 1006.14(b)(2) for a period of up to seven the debt collector during the seven- debt collector placed the telephone call to consecutive days. A person’s prior consent consecutive-day period that began with permit the debt collector and the consumer may expire before the conclusion of the receipt of the consumer’s consent on to complete the conversation about seven-consecutive-day period. A person’s Thursday, June 4. Those telephone calls settlement terms, which provided the prior consent expires when any of the therefore do not count toward the telephone consumer an opportunity to avoid a following occurs: (1) The person consented to call frequencies described in demonstrably negative effect that was not in the additional telephone calls for a shorter § 1006.14(b)(2)(i). However, any telephone the debt collector’s control (i.e., having to time period and such time period has ended; calls placed by the debt collector after the repeat a substantive conversation with a (2) the person revokes such prior consent; or end of the seven-day period (i.e., on or after potentially different representative of the (3) the debt collector has a telephone Thursday, June 11) would count toward the debt collector) and where time was of the conversation with the person regarding the telephone call frequencies described in essence (i.e., to prevent the delay of particular debt. § 1006.14(b)(2)(i), unless the consumer again settlement negotiations by seven days) is a 3. Examples. The following examples gives prior consent directly to the debt factor that may rebut the presumption of a illustrate how § 1006.14(b)(3)(i) applies: collector. violation. i. On Friday, April 3, a debt collector Paragraph 14(b)(3)(ii) B. The consumer previously entered into a places a telephone call to a consumer. During payment plan with the debt collector the ensuing telephone conversation in 1. Unconnected telephone calls. Section regarding the credit card debt. The connection with the collection of a debt, the 1006.14(b)(3)(ii) provides that telephone calls conditions for the payment plan were set by consumer tells the debt collector to ‘‘call placed to a person do not count toward the the creditor, and among those conditions is back on Monday.’’ Absent an exception, telephone call frequencies described in § 1006.14(b)(2)(i) if they do not connect to the that only the creditor, in its sole discretion, under § 1006.14(b)(2)(ii), the debt collector dialed number. A debt collector’s telephone may approve waivers of late fees. On would be presumed to violate § 1006.14(b)(1) call does not connect to the dialed number Monday, August 17, the debt collector and FDCPA section 806(5) (15 U.S.C. if, for example, the debt collector receives a learned that the consumer’s payment failed 1692d(5)) if the debt collector called the busy signal or an indication that the dialed to process, and the applicable grace period consumer on Monday, April 6, because the number is not in service. Conversely, a was set to expire on Tuesday, August 18. The additional telephone call would exceed the telephone call placed to a person counts debt collector placed a telephone call to the frequency described in § 1006.14(b)(2)(i)(B). toward the telephone call frequencies consumer on Monday to remind the Under § 1006.14(b)(3)(i), however, in the described in § 1006.14(b)(2)(i) if it connects consumer that a late fee would be applied by scenario described (and absent any other to the dialed number, unless an exclusion in the creditor for non-payment unless the facts), the debt collector could, pursuant to consumer made the payment by the next day. § 1006.14(b)(3) applies. A debt collector’s the consumer’s prior consent, place telephone call connects to the dialed number The fact that the debt collector placed the telephone calls to the consumer on Monday, telephone call to alert the consumer to the if, for example, the telephone call is April 6, and not lose a presumption of answered, even if it subsequently drops; if pending penalty, giving the consumer an compliance with § 1006.14(b)(1) and FDCPA opportunity to avoid a demonstrably negative the telephone call causes a telephone to ring section 806(5). at the dialed number but no one answers it; effect that was not in the debt collector’s ii. Assume the same facts as in the control and where time was of the essence, or if the telephone call is connected to a preceding example, except that the consumer voicemail or other recorded message, even if is a factor that may rebut the presumption of does not specify a particular day the debt a violation. it does not cause a telephone to ring and even collector may call back. Assume further that, if the debt collector is unable to leave a C. On Monday, August 17, the debt on Monday, April 6, the debt collector calls voicemail. collector placed a telephone call to the the consumer back and has a telephone consumer to offer the consumer a ‘‘one-time conversation with the consumer. The 14(b)(4) Definition only’’ discount on the payment of the credit exception in § 1006.14(b)(3)(i) does not apply 1. Particular debt. Section 1006.14(b)(2) card debt. The debt collector stated that the to subsequent telephone calls placed by the establishes presumptions of compliance and offer would expire the next day when, in fact, debt collector to the consumer, absent violation with respect to § 1006.14(b)(1) and the debt collector could have offered the additional prior consent from the consumer. FDCPA section 806(5) (15 U.S.C. 1692d(5)) same or a similar discount through the end For example, if the debt collector, without based on the frequency with which a debt of August. Because the negative effect on the additional prior consent, placed a telephone collector places telephone calls to, or engages consumer was in the debt collector’s control, call to the consumer on Wednesday, April 8, in telephone conversation with, a person in the discount offer is not a factor that may that telephone call would count toward the connection with the collection of a particular rebut the presumption of a violation. telephone call frequencies described in debt. Section 1006.14(b)(4) provides that, 14(b)(3) Certain Telephone Calls Excluded § 1006.14(b)(2), and, pursuant to except in the case of student loan debt, the From Telephone Call Frequencies § 1006.14(b)(2)(ii), the debt collector would term particular debt means each of a be presumed to violate § 1006.14(b)(1) and consumer’s debts in collection. For student Paragraph 14(b)(3)(i) FDCPA section 806(5). loan debt, § 1006.14(b)(4) provides that the 1. Prior consent. Section 1006.14(b)(3)(i) iii. Between Monday, June 1, and term particular debt means all student loan excludes from the telephone call frequencies Wednesday, June 3, a debt collector places debts that a consumer owes or allegedly owes described in § 1006.14(b)(2) certain telephone three unanswered telephone calls to a that were serviced under a single account calls placed to a person who gives prior consumer in connection with the collection number at the time the debts were obtained consent. See § 1006.6(b)(4)(i) and its of a debt. Also on Wednesday, June 3, the by a debt collector. associated commentary for guidance about debt collector sends the consumer an email i. Placing a telephone call in connection giving prior consent directly to a debt message in connection with the collection of with the collection of a particular debt. collector. Nothing in § 1006.14(b)(3)(i) the debt. The consumer responds by email on Under § 1006.14(b)(2)(i)(A), if a debt collector regarding prior consent for telephone call Thursday, June 4, requesting additional places a telephone call to a person and frequencies permits a debt collector to information about available repayment initiates a conversation or leaves a voicemail communicate, or attempt to communicate, options related to the debt and writes, ‘‘You about one particular debt, the debt collector

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00171 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76904 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

counts the telephone call as a telephone call section 806(5), even if, for example, the debt particular debt. Under § 1006.14(b)(2)(i)(A) in connection with the collection of the collector intended to discuss both credit card and (B) respectively, the debt collector may particular debt, subject to the exclusions in debt A and credit card debt B had any of the count the November 12 telephone call and § 1006.14(b)(3). If a debt collector places a telephone calls with respect to the credit card ensuing conversation toward either the telephone call to a person and initiates a debts resulted in a telephone conversation. medical debt or the credit card debt. For conversation or leaves a voicemail about ii. A debt collector is attempting to collect example, if the debt collector counts the more than one particular debt, the debt a medical debt and a credit card debt from November 12 telephone call and ensuing collector counts the telephone call as a the same consumer. The debt collector places conversation toward the collection of only telephone call in connection with the a telephone call to the consumer, intending the medical debt, then, during this time collection of each such particular debt, to discuss both particular debts, but the period, the debt collector has placed three subject to the exclusions in § 1006.14(b)(3). If consumer does not answer, and the telephone calls and has had one conversation a debt collector places a telephone call to a telephone call goes to voicemail. The debt in connection with the collection of the person but neither initiates a conversation collector leaves a limited-content message, as medical debt, and has placed four telephone about a particular debt nor leaves a voicemail defined in § 1006.2(j). Because the limited- calls and has had no conversations in that refers to a particular debt, or if the debt content message does not specifically refer to connection with the collection of the credit collector’s telephone call is unanswered, the any particular debt, under card debt. debt collector counts the telephone call as a § 1006.14(b)(2)(i)(A), a debt collector may vi. A debt collector is attempting to collect telephone call in connection with the count the voicemail as one telephone call a medical debt and a credit card debt from collection of at least one particular debt, placed toward either of the particular debts, the same consumer. On Monday, November unless an exclusion in § 1006.14(b)(3) even though the debt collector intended to 9, the debt collector places a telephone call applies. discuss both particular debts if the telephone to, and initiates a telephone conversation ii. Engaging in a telephone conversation in call had resulted in a telephone conversation. with, the consumer about the collection of connection with the collection of a particular iii. A debt collector is attempting to collect the medical debt. The consumer states that debt. Under § 1006.14(b)(2)(i)(B), if a debt a medical debt and a credit card debt from the consumer does not want to discuss the collector and a person discuss one particular the same consumer. On Monday, November medical debt, and instead initiates a debt during a telephone conversation, the 9, the debt collector places a telephone call discussion about the credit card debt. Under debt collector has engaged in a telephone to, and engages in a telephone conversation § 1006.14(b)(2)(i)(A) and (B) respectively, the conversation in connection with the with, the consumer solely in connection with debt collector has both placed a telephone collection of the particular debt, regardless of the collection of the medical debt. The debt call to, and engaged in a telephone which party initiated the discussion about collector does not place any telephone calls conversation with, the consumer in the particular debt, subject to the exclusions to the consumer in connection with the connection with the collection of the medical in § 1006.14(b)(3). If a debt collector and a collection of the credit card debt. Regarding debt, even though the consumer was person discuss more than one particular debt the medical debt, under § 1006.14(b)(2)(i)(A) unwilling to engage in the discussion during a telephone conversation, the debt and (B) respectively, the debt collector has initiated by the debt collector regarding the collector has engaged in a telephone placed a telephone call to, and has and medical debt. Under § 1006.14(b)(2)(i)(A) and conversation in connection with the engaged in a telephone conversation with, (B) respectively, the debt collector has not collection of each such particular debt, the consumer in connection with the placed a telephone call to the consumer in regardless of which party initiated the collection of the particular debt, unless an connection with the credit card debt, but the discussion about the particular debts, subject exclusion in § 1006.14(b)(3) applies. debt collector has engaged in a telephone to the exclusions in § 1006.14(b)(3). If no Regarding the credit card debt, under conversation in connection with the particular debt is discussed during a § 1006.14(b)(2)(i)(A) and (B) respectively, the collection of the credit card debt, even telephone conversation between a debt debt collector has neither placed a telephone though the consumer, not the debt collector, collector and a person, the debt collector call to, nor engaged in a telephone initiated the discussion about the credit card counts the conversation as a telephone conversation with, the consumer in debt. conversation in connection with the connection with the collection of the vii. A debt collector is attempting to collect collection of at least one particular debt, particular debt. three student loan debts that were serviced unless an exclusion in § 1006.14(b)(3) iv. Assume the same facts as in the under a single account number at the time applies. preceding example, except that on Monday, that they were obtained by a debt collector 2. Examples. The following examples November 9, the debt collector engages in a and that are owed or allegedly owed by the illustrate the rule. telephone conversation with the consumer in same consumer. All three debts are treated as i. A debt collector is attempting to collect connection with the collection of both the a single debt for purposes of § 1006.14(b)(2). a medical debt and two credit card debts medical debt and the credit card debt. Under The debt collector is presumed to comply (denominated A and B for this example) from § 1006.14(b)(2)(i)(A) and (B) respectively, the with § 1006.14(b)(1) and FDCPA section the same consumer. Under debt collector has placed a telephone call to, 806(5) if the debt collector places seven or § 1006.14(b)(2)(i)(A), a debt collector may and has engaged in a telephone conversation fewer telephone calls within seven count an unanswered telephone call as one with, the consumer in connection with the consecutive days to the consumer in telephone call placed toward any one collection of both the medical debt and the connection with the collection of the three particular debt, even if the debt collector credit card debt, unless an exclusion in student loan debts, and the debt collector intended to discuss more than one particular § 1006.14(b)(3) applies. does not place a telephone call within a debt had the telephone call resulted in a v. A debt collector is attempting to collect period of seven consecutive days after having telephone conversation. Therefore, if the debt a medical debt and a credit card debt from had a telephone conversation with the collector, within a period of seven the same consumer. Beginning on Monday, consumer in connection with the collection consecutive days, places a total of 21 November 9, and through Wednesday, of any one of the three student loan debts, unanswered telephone calls, seven of which November 11, the debt collector places two unless an exclusion in § 1006.14(b)(3) the debt collector counted as unanswered unanswered telephone calls to the consumer applies. telephone calls to the consumer in which the debt collector counts as telephone 14(h) Prohibited Communication Media connection with the collection of the medical calls in connection with the collection of the debt, seven of which the debt collector medical debt, and four unanswered 14(h)(1) In General counted as unanswered telephone calls to the telephone calls to the consumer which the 1. Communication media designations. consumer in connection with the collection debt collector counts as telephone calls in Section 1006.14(h)(1) prohibits a debt of credit card debt A, and seven of which the connection with the collection of the credit collector from communicating or attempting debt collector counted as unanswered card debt. On Thursday, November 12, the to communicate with a person in connection telephone calls to the consumer in debt collector places a telephone call to, and with the collection of any debt through a connection with the collection of credit card engages in a general telephone conversation medium of communication if the person has debt B, the debt collector is presumed to with, the consumer, but the debt collector requested that the debt collector not use that comply with § 1006.14(b)(1) and FDCPA and the consumer do not discuss either medium to communicate with the person.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00172 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76905

The debt collector may ask follow-up representation or deceptive means to collect communicates with, the debt collector. questions regarding preferred communication any debt or to obtain information concerning Pursuant to § 1006.18(e)(1), because the media to clarify statements by the person. For a consumer. In the social media context, the consumer-initiated call is the initial examples of communication media, see following examples illustrate the rule: communication between the debt collector comment 2(d)–1. i. Assume that a debt collector sends a and the consumer, the debt collector must 2. Specific address or telephone number. private message, in connection with the disclose to the consumer during that Within a medium of communication, a collection of a debt, requesting to be added telephone call that the debt collector is person may request that a debt collector not as one of the consumer’s contacts on a social attempting to collect a debt and that any use a specific address or telephone number. media platform marketed for social or information obtained will be used for that For example, if a person has two mobile professional networking purposes. A debt purpose. telephone numbers, the person may request collector makes a false representation or 18(e)(4) Translated Disclosures that the debt collector not use one or both implication if the debt collector does not mobile telephone numbers. disclose his or her identity as a debt collector 1. Example. Section 1006.18(e)(4) provides 3. Examples. The following examples in the request. that a debt collector must make the illustrate the prohibition in § 1006.14(h)(1). ii. Assume that a debt collector disclosures required by § 1006.18(e)(1) and i. Assume that a person tells a debt communicates privately with a friend or (2) in the same language or languages used collector to ‘‘stop calling’’ the person. Based coworker of a consumer on a social media for the rest of the communication in which on these facts, the person has requested that platform, for the purpose of acquiring the disclosures are conveyed. The following the debt collector not use telephone calls to location information about the consumer. example illustrates the rule: communicate with the person and, thereafter, Pursuant to § 1006.10(b)(1), the debt collector i. ABC debt collector is collecting a debt. § 1006.14(h)(1) prohibits the debt collector must identify himself or herself individually ABC debt collector’s initial communication from communicating or attempting to by name when communicating for the with the consumer takes place in Spanish. communicate with the person through purpose of acquiring location information. To Section 1006.18(e)(4) requires ABC debt telephone calls. avoid violating § 1006.18(d), the debt collector to provide in Spanish the disclosure ii. Assume that, in response to receipt of collector must communicate using a profile required by § 1006.18(e)(1). Thereafter, ABC either the opt-out procedures described in that accurately identifies the debt collector’s debt collector has a communication with the § 1006.6(d)(4)(ii) or the opt-out notice in individual name. (But see § 1006.18(f) and its consumer that takes place partly in English § 1006.6(e), a consumer requests to opt out of associated commentary regarding use of and partly in Spanish. During this receiving electronic communications from a assumed names.) The debt collector also communication, the debt collector must debt collector at a particular email address or must comply with the other applicable provide the disclosure required by telephone number. Based on these facts, the requirements for obtaining location § 1006.18(e)(2) in both English and Spanish. consumer has requested that the debt information in § 1006.10 (e.g., with respect to 18(f) Assumed Names collector not use that email address or stating that the debt collector is confirming or correcting location information concerning 1. Readily identifiable by the employer. telephone number to electronically Section 1006.18(f) provides, in part, that communicate with the consumer for any debt the consumer and, only if expressly requested, identifying the name of the debt § 1006.18 does not prohibit a debt collector’s and, thereafter, § 1006.14(h)(1) prohibits the employee from using an assumed name when debt collector from electronically collector’s employer), for communicating with third parties in § 1006.6(d)(1), and for communicating or attempting to communicating or attempting to communicate with a person, provided that communicate with the consumer through communicating through social media in § 1006.22(f)(4). the debt collector can readily identify any that email address or telephone number. employee using an assumed name. A debt 14(h)(2) Exceptions 18(e) Disclosures Required collector may use any method of managing 1. Legally required communication media. 1. Communication. A limited-content assumed names that enables the debt Under § 1006.14(h)(2)(iii), if otherwise message, as defined in § 1006.2(j), is not a collector to determine the true identity of any required by applicable law, a debt collector communication, as that term is defined in employee using an assumed name. For may communicate or attempt to § 1006.2(d). Thus, a debt collector who leaves example, a debt collector may require an communicate with a person in connection only a limited-content message for a employee to use the same assumed name with the collection of any debt through a consumer need not make the disclosures when communicating or attempting to medium of communication that the person required by § 1006.18(e)(1) and (2). However, communicate with any person and may has requested the debt collector not use to if a debt collector leaves a voicemail message prohibit any other employee from using the for a consumer that includes content in communicate with the person. For example, same assumed name. addition to the content described in assume that a debt collector who is also a § 1006.2(j)(1) and (2) and that directly or Section 1006.22—Unfair or Unconscionable mortgage servicer subject to the periodic indirectly conveys any information regarding Means statement requirement for residential a debt, the voicemail message is a mortgage loans under Regulation Z, 12 CFR 22(f) Restrictions on Use of Certain Media communication, and the debt collector is 1026.41, is engaging in debt collection required to make the § 1006.18(e) disclosures. Paragraph 22(f)(2) communications with a person about the See the commentary to § 1006.2(d) and (j) for 1. Language or symbol. Section person’s residential mortgage loan. The additional clarification regarding the 1006.22(f)(2) provides, in relevant part, that person tells the debt collector to stop mailing definitions of communication and limited- a debt collector must not use any language letters to the person, and the person has not content message. or symbol, other than the debt collector’s consented to receive statements address, on any envelope when electronically in accordance with 12 CFR 18(e)(1) Initial Communications communicating with a consumer by mail. For 1026.41(c). Although the person has 1. Example. A debt collector must make purposes of § 1006.22(f)(2), the phrase requested that the debt collector not use mail the disclosure required by § 1006.18(e)(1) in ‘‘language or symbol’’ does not include to communicate with the person, the debt collector’s initial communication language and symbols that facilitate § 1006.14(h)(2)(iii) permits the debt collector with a consumer, regardless of the medium communications by mail, such as: The to mail the person periodic statements, of communication and regardless of whether debtor’s name and address; postage; language because the periodic statements are required the debt collector or the consumer initiated such as ‘‘forwarding and address correction by applicable law. the communication. For example, assume requested’’; and the United States Postal Section 1006.18—False, Deceptive, or that a debt collector who has not previously Service’s Intelligent Mail barcode. Misleading Representations or Means communicated with a consumer attempts to communicate with the consumer by leaving Paragraph 22(f)(3) 18(d) False Representations or Deceptive a limited-content message, as defined in 1. Email addresses described in Means § 1006.2(j). After listening to the debt § 1006.6(d)(4). Section 1006.22(f)(3) generally 1. Social media. Under § 1006.18(d), a debt collector’s limited-content message, the prohibits a debt collector from collector may not use any false consumer initiates a telephone call to, and communicating or attempting to

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00173 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76906 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations

communicate with a consumer by sending an debt collector sends a file with data about the dispute previously submitted by the email to an email address that the debt debt to another person for analytics, consumer in writing within the validation collector knows is provided to the consumer ‘‘scrubbing,’’ or archiving. A debt collector period for which the debt collector has by the consumer’s employer. The prohibition also does not transfer a debt for consideration already satisfied the requirements of does not apply if the debt collector sends the when the debt collector reports to a credit § 1006.38(d)(2)(i). A later dispute can be email to an email address described in reporting agency information that a debt has substantially the same as an earlier dispute § 1006.6(d)(4)(i) or (iii), which specifically been paid or settled or discharged in even if the later dispute does not repeat contemplate debt collectors sending emails to bankruptcy. verbatim the language of the earlier dispute. any email address—including an email 2. Debt that resulted from identity theft. 2. New and material information. Section address that a debt collector knows is Section 615(f)(1) of the Fair Credit Reporting 1006.38(a)(1) provides that a dispute that is employer provided—if the consumer has Act (15 U.S.C. 1681m(f)(1)) states that no substantially the same as a dispute used the email address to communicate with person shall sell, transfer for consideration, previously submitted by the consumer in the debt collector about a debt or place for collection a debt if such person writing within the validation period for (§ 1006.6(d)(4)(i)(A)), has provided prior has been notified under section 605B of the which the debt collector has already satisfied consent directly to the debt collector to use Fair Credit Reporting Act (15 U.S.C. 1681c– the requirements of § 1006.38(d)(2)(i) is not a the email address (§ 1006.6(d)(4)(i)(B)), or has 2) that the debt has resulted from identity duplicative dispute if the consumer provides obtained the email address from a prior debt theft. Nothing in § 1006.30(b)(1) alters a debt new and material information to support the collector who satisfied either § 1006.6(d)(4)(i) collector’s obligation to comply with the dispute. Information is new if the consumer or (ii). A debt collector who sends an email prohibition set forth in section 615(f)(1) of did not provide the information when to an email address described in the Fair Credit Reporting Act. submitting an earlier dispute. Information is § 1006.6(d)(4)(ii) complies with the 30(b)(2) Exceptions material if it is reasonably likely to change prohibition in § 1006.22(f)(3) because the the verification the debt collector provided or procedures in § 1006.6(d)(4)(ii) do not permit 30(b)(2)(i) In General would have provided in response to the debt collectors to send emails to email Paragraph 30(b)(2)(i)(A) earlier dispute. The following example addresses that the debt collector knows are illustrates the rule: employer provided. 1. In general. Under § 1006.30(b)(2)(i)(A), a debt collector who is collecting a debt i. ABC debt collector is collecting a debt Paragraph 22(f)(4) described in § 1006.30(b)(1) may transfer the from a consumer and sends the consumer a 1. Social media. Section 1006.22(f)(4) debt to the debt’s owner. However, unless validation notice. In response, the consumer prohibits a debt collector from another exception under § 1006.30(b)(2) submits a written dispute to ABC debt communicating or attempting to applies, the debt collector may not transfer collector within the validation period communicate with a person in connection the debt or the right to collect the debt to asserting that the consumer does not owe the with the collection of a debt through a social another entity on behalf of the debt owner. debt. The consumer does not include any media platform if the communication or information in support of the dispute. Section 1006.38—Disputes and Requests for Pursuant to § 1006.38(d)(2)(i), ABC debt attempt to communicate is viewable by the Original-Creditor Information general public or the person’s social media collector provides the consumer a copy of contacts. For example, § 1006.22(f)(4) 1. In writing. Section 1006.38 contains verification of the debt. The consumer then prohibits a debt collector from posting, in requirements related to a dispute or request sends a cancelled check showing the connection with the collection of a debt, any for the name and address of the original consumer paid the debt. The cancelled check message for a person on a social media web creditor timely submitted in writing by the is new and material information. page if that web page is viewable by the consumer. A consumer has disputed the debt 38(d) Disputes general public or the person’s social media or requested the name and address of the contacts. Section 1006.22(f)(4) does not original creditor in writing for purposes of 38(d)(2) Response to Disputes § 1006.38(c) or (d)(2) if the consumer, for prohibit a debt collector from sending a Paragraph 38(d)(2)(ii) message to a person if the message is not example: viewable by the general public or the i. Mails the written dispute or request to 1. Duplicative dispute notice. Section person’s social media contacts. Section the debt collector; 1006.38(d)(2)(ii) provides that, in the case of 1006.6(b) or § 1006.14(h) nonetheless may ii. Provides the dispute or request to the a dispute that a debt collector reasonably prohibit the debt collector from sending such debt collector using a medium of electronic determines is a duplicative dispute, the debt a message, and a debt collector who communication through which the debt collector must cease collection of the debt, or communicates by sending such a message collector accepts electronic communications any disputed portion of the debt, until the about the debt to the wrong person violates from consumers, such as an email address or debt collector either notifies the consumer § 1006.6(d)(1). See also comment 18(d)–1 a website portal; or that the dispute is duplicative with respect to communications and attempts iii. Delivers the written dispute or request (§ 1006.38(d)(2)(ii)(A)) or provides a copy to communicate with consumers and third in person or by courier to the debt collector. either of verification of the debt or of a parties on social media platforms. 2. Interpretation of the E-SIGN Act. judgment to the consumer Comment 38–1.ii constitutes the Bureau’s (§ 1006.38(d)(2)(ii)(B)). If the debt collector Section 1006.30—Other Prohibited Practices interpretation of section 101 of the E-SIGN notifies the consumer that the dispute is 30(b) Prohibition on the Sale, Transfer for Act as applied to section 809(b) of the duplicative, § 1006.38(d)(2)(ii)(A) requires Consideration, or Placement for Collection of FDCPA. Under this interpretation, section that the notice provide a brief statement of Certain Debts 101(a) of the E-SIGN Act enables a consumer the reasons for the debt collector’s to satisfy through an electronic request the determination that the dispute is duplicative 30(b)(1) In General requirement in section 809(b) of the FDCPA and refer the consumer to the debt collector’s 1. Transfer for consideration. Section that the consumer’s notification of the debt response to the earlier dispute. A debt 1006.30(b)(1) prohibits, among other things, collector be ‘‘in writing.’’ Further, because collector complies with the requirement to a debt collector from transferring for the consumer may only use a medium of provide a brief statement of the reasons for consideration a debt that has been paid or electronic communication through which a its determination if the notice states that the settled or discharged in bankruptcy. A debt debt collector accepts electronic dispute is substantially the same as an earlier collector transfers a debt for consideration communications from consumers, section dispute submitted by the consumer and the when the debt collector receives or expects 101(b) of the E-SIGN Act is not contravened. consumer has not included any new and to receive compensation for the transfer of 38(a) Definitions material information in support of the earlier the debt. A debt collector does not transfer dispute. A debt collector complies with the a debt for consideration when the debt 38(a)(1) Duplicative Dispute requirement to refer the consumer to the debt collector sends information about the debt, as 1. Substantially the same. Section collector’s response to the earlier dispute if opposed to the debt itself, to another party. 1006.38(a)(1) provides that a dispute is a the notice states that the debt collector For example, a debt collector does not duplicative dispute if, among other things, responded to the earlier dispute and provides transfer a debt for consideration when the the dispute is substantially the same as a the date of that response.

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00174 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76907

Section 1006.42—Sending Required use that email address or telephone number of the record retention requirement set forth Disclosures to send required disclosures. in § 1006.100(a). For example, § 1006.100(a) does not require a debt collector to create call 42(a) Sending Required Disclosures Subpart C—[Reserved] logs showing that it has not attempted to 42(a)(1) In General Subpart D—Miscellaneous communicate with any consumers at times 1. Relevant factors. Section 1006.42(a)(1) Section 1006.100—Record Retention that the consumers designated as inconvenient. However, if the debt collector provides, in part, that a debt collector who 1. Three-year retention period. Section sends disclosures required by the Act or this 1006.100 requires a debt collector to maintains call logs, the call logs are evidence part in writing or electronically must, among maintain records that are evidence of of compliance or noncompliance with the other things, do so in a manner that is compliance or noncompliance with the FDCPA and this part and the collector must reasonably expected to provide actual notice. FDCPA and this part starting on the date that retain them. In determining whether a debt collector has the debt collector begins collection activity 3. Methods of retaining evidence. Section complied with this requirement, relevant on a debt until three years after the debt 1006.100(a) does not require a debt collector factors include whether the debt collector: collector’s last collection activity on the debt to retain actual paper copies of documents. i. Identified the purpose of the or, in the case of telephone call recordings, Records may be retained by any method that communication by including, in the subject until three years after the dates of the reproduces the records accurately (including line of an electronic communication telephone calls. Nothing in § 1006.100 computer programs) and that ensures that the transmitting the disclosure, the name of the prohibits a debt collector from retaining debt collector can easily access the records creditor to whom the debt currently is owed records that are evidence of compliance or (including a contractual right to access or allegedly is owed and one additional piece noncompliance with the FDCPA and this part records possessed by another entity). of information identifying the debt, other for more than three years after the applicable 4. When the three-year record retention than the amount, such as a truncated account date. number; the name of the original creditor; the clock starts to run. Section 1006.100(a) name of any store brand associated with the 100(a) In General provides, in part, that a debt collector must debt; the date of sale of a product or service 1. Records that evidence compliance. retain records that are evidence of giving rise to the debt; the physical address Section 1006.100(a) provides, in part, that a compliance or noncompliance until three of service; and the billing or mailing address debt collector must retain records that are years after the debt collector’s last collection on the account; evidence of compliance or noncompliance activity on a debt. An event such as the debt ii. Permitted receipt of notifications of with the FDCPA and this part. Thus, under collector transferring the debt for undeliverability from communications § 1006.100(a), a debt collector must retain consideration to another party would start providers, monitored for any such records that evidence that the debt collector the running of the debt collector’s three-year notifications, and treated any such performed the actions and made the record retention clock with respect to the notifications as precluding a reasonable disclosures required by the FDCPA and this debt, provided that the transfer of the debt expectation of actual notice for that delivery part, as well as records that evidence that the represents the debt collector’s last collection attempt; and debt collector refrained from conduct activity on the debt. In contrast, the debt’s iii. Identified itself as the sender of the prohibited by the FDCPA and this part. If a discharge in bankruptcy, or the consumer’s communication by including a business record is of a type that could evidence curing of default on the debt, would not name that the consumer would be likely to compliance or noncompliance depending on represent the time at which the three-year recognize, such as the name included in the the conduct of the debt collector that is record-retention clock starts to run if the debt notice described in § 1006.6(d)(4)(ii)(C), or revealed within the record, then the record collector continues collection activity on the the name that the debt collector has used in is one that is evidence of compliance or debt after that time, which might occur when a prior limited-content message left for the noncompliance and the debt collector must the debt is secured and an enforceable lien consumer or in an email message sent to the retain it. Such records include, but are not on the collateral that secured the debt consumer. limited to, records that evidence that the debt survives the bankruptcy discharge (and 2. Notice of undeliverability. A debt collector’s communications and attempts to collection activity pursuant to the lien collector who sends a required disclosure in communicate in connection with the continues after the discharge). writing or electronically and who receives a collection of a debt complied (or did not notice that the disclosure was not delivered comply) with the FDCPA and this part. For 100(b) Special Rule for Telephone Call has not sent the disclosure in a manner that example, a debt collector must retain: Recordings is reasonably expected to provide actual i. Telephone call logs as evidence of 1. Recorded telephone calls. Nothing in notice under § 1006.42(a)(1). compliance or noncompliance with the § 1006.100 requires a debt collector to record 3. Safe harbor for notices sent by mail. prohibition against harassing telephone calls telephone calls. However, if a debt collector Subject to comment 42(a)(1)–2, a debt in § 1006.14(b)(1); and records telephone calls, the recordings are collector satisfies § 1006.42(a)(1) if the debt ii. Copies of documents provided to evidence of compliance or noncompliance collector mails a printed copy of a disclosure consumers as evidence that the debt collector with the FDCPA and this part, and, under to the consumer’s last known address, unless provided the information required by FDCPA § 1006.100(b), the debt collector must retain section 809(a) (15 U.S.C. 1692g(a)), as the debt collector, at the time of mailing, the recording of each such telephone call for knows or should know that the consumer implemented by Bureau regulation, and three years after the date of the call. does not currently reside at, or receive mail § 1006.38 and met the delivery requirements at, that location. of § 1006.42. Dated: October 30, 2020. 4. Effect of consumer opt out. If a consumer 2. No requirement to create additional Laura Galban, has opted out of debt collection records. A debt collector need not create and Federal Register Liaison, Bureau of Consumer communications to a particular email address maintain additional records, for the sole Financial Protection. or telephone number by, for example, purpose of evidencing compliance, that the following the instructions provided pursuant debt collector would not have created in the [FR Doc. 2020–24463 Filed 11–27–20; 8:45 am] to § 1006.6(e), then a debt collector cannot ordinary course of its business in the absence BILLING CODE 4810–AM–P

VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00175 Fmt 4701 Sfmt 9990 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3